Market Analysis

Despite a favorable risk tone and lower Fed rate cut predictions, the price of gold struggles to draw in purchasers

Amos Simanungkalit · 24 Apr 202442.5K Views

Gold prices, represented by XAU/USD, struggled to capitalize on Tuesday's rebound from a two-week low just below $2,300, remaining in a narrow range during Wednesday's Asian session. Decreasing concerns regarding further tensions in the Middle East weighed on the safe-haven asset. Additionally, growing expectations of the Federal Reserve maintaining higher interest rates for an extended period due to persistent inflationary pressures limited upside potential for gold.

The US Dollar hovered near its lowest level in over a week following disappointing US PMI data on Tuesday, suggesting a slowdown in economic momentum at the beginning of the second quarter. This provided some support to gold as traders awaited key US economic indicators, including the Advance Q1 GDP report and the Personal Consumption Expenditures (PCE) Price Index later in the week. In the interim, the US Durable Goods Orders data might influence XAU/USD trading.

Technical Analysis: In order for bears to take the lead, the price of gold needs to find acceptance below $2,300.

Technically, XAU/USD exhibited resilience below the 23.6% Fibonacci retracement level of the February-April rally. The bounce, coupled with oscillators holding in positive territory on the daily chart, urged caution among bearish traders.

Hence, it's advisable to await confirmation below the $2,300 level before considering deeper losses, potentially targeting the $2,260-2,255 area, or the 38.2% Fibonacci level, followed by the $2,225 intermediate support and the confluence of the 50% Fibonacci level and the 50-day Simple Moving Average (SMA) around $2,200-2,190.

Conversely, any upward movement is likely to face resistance around the $2,350-2,355 region, with further hurdles near the $2,380 supply zone, $2,400 mark, and the all-time peak around $2,431-2,432. A sustained breakout above the latter would signal bullish momentum and potentially extend the recent rally witnessed over the past couple of months.