Market Analysis

Gold Price Reaches Two-Week High Amid Fed Rate Cut Expectations and Weaker US Dollar

Amos Simanungkalit · 06 Jun 202498.2K Views

Gold prices (XAU/USD) have continued their upward momentum for the second consecutive day, reaching a two-week high around the $2,375 mark during the European session on Thursday. The near-term outlook remains bullish, fueled by expectations that major central banks will reduce borrowing costs to stimulate economic activity.

Notably, the Bank of Canada (BoC) lowered its benchmark rate on Wednesday for the first time in four years, signaling concerns over slowing economic growth. Similarly, the European Central Bank (ECB) is anticipated to cut interest rates for the first time since March 2016 at the conclusion of its June policy meeting later today.

In the United States, market sentiment increasingly favors an imminent rate cut by the Federal Reserve (Fed) amid signs of economic slowdown. These expectations have kept US Treasury bond yields near their lowest levels in over two months, preventing the US Dollar (USD) from sustaining its modest recovery gains seen over the past two days. Additionally, ongoing geopolitical tensions in the Middle East continue to support the safe-haven appeal of gold. Despite these positive factors, the upside for XAU/USD appears limited as traders await the release of the US Nonfarm Payrolls (NFP) report on Friday.

Technical Analysis: Gold Prices Likely to Face Strong Resistance Near $2,400

From a technical standpoint, surpassing the $2,364 level—last week's swing high—could trigger further bullish momentum. However, mixed signals from oscillators on the daily chart suggest caution before committing to additional gains. Consequently, any upward movement is likely to encounter significant resistance and remain capped near the $2,400 mark. Continued buying could push gold prices to the next key resistance around $2,425, potentially reaching the $2,450 area, the all-time high recorded in May.

Conversely, a significant decline below the $2,360 level might attract fresh buying interest around the $2,340 horizontal zone, limiting the downside near the $2,315-2,314 area, which is the multi-week low touched on Tuesday. A decisive break below this level would confirm a breach of the 50-day Simple Moving Average (SMA), paving the way for deeper losses. XAU/USD could then fall below the $2,300 psychological mark and test the $2,280 support zone.