Market Analysis

Gold Price Consolidates Below $2,300, Near One-Month Low

Amos Simanungkalit · 10 Jun 2024103.8K Views

Gold prices (XAU/USD) have entered a bearish consolidation phase, hovering near their lowest level in over a month, staying below the $2,300 mark reached after strong US monthly job data last Friday. The Nonfarm Payrolls (NFP) report revealed more job creation than anticipated in May, leading investors to dial back expectations for a Federal Reserve (Fed) interest rate cut in September. This has kept US Treasury bond yields high and lifted the US Dollar (USD) to nearly a one-month peak, creating headwinds for gold, which doesn't yield interest.

Additionally, news that the People's Bank of China (PBoC) paused its gold purchases for reserves in May, ending an 18-month buying spree, has further weighed on gold prices. However, a cautious market sentiment has provided some support to the safe-haven XAU/USD, limiting steep declines. Traders are also hesitant to take aggressive positions ahead of key US data releases and central bank events this week, including the latest US consumer inflation figures and the outcome of the two-day FOMC policy meeting on Wednesday. This suggests a need for caution before positioning for further price drops.

In terms of technical analysis, the recent close below the 50-day Simple Moving Average (SMA) and a breach of the $2,300 mark signal a bearish turn for gold. Oscillators on the daily chart indicate a growing negative momentum, suggesting a downward trend for gold prices. If the price falls below the $2,285 support level, it could head towards the next significant support around $2,254-2,253. Further downside movement could lead to the $2,225-2,220 range and potentially to the $2,200 level.

On the upside, any recovery attempts are likely to face resistance near the $2,325 zone and the 50-day SMA support, currently around $2,343-2,344. Subsequent hurdles include the $2,360-2,362 range, with a clear breakthrough possibly leading to a retest of last week’s high near $2,387-2,388 and a reclaiming of the $2,400 mark. Sustained strength beyond this level would invalidate the short-term bearish bias and could signal a significant upward movement in the near term.