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Market Analysis

Gold Price Dips Amid Cautious Federal Reserve Remarks
Amos Simanungkalit · 137.4K Views

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Despite a weaker Greenback, gold prices (XAU/USD) remain in positive territory on Tuesday. Last week's stronger-than-expected US Purchasing Managers Index (PMI) prompted Federal Reserve (Fed) officials to delay the timing of the first interest rate cut this year, limiting gold’s upward movement. However, safe-haven flows driven by geopolitical tensions in the Middle East and Ukraine could bolster the yellow metal in the near term.

 

Investors will look for further insights from Fed members' speeches on Tuesday, with Lisa Cook and Michelle Bowman scheduled to speak. Key US economic data to watch this week includes the final reading of the US Gross Domestic Product (GDP) for the first quarter (Q1) on Thursday and the Personal Consumption Expenditure (PCE) Price Index for May, due on Friday. Evidence of easing inflation trends could raise expectations for Fed rate cuts later in 2024, potentially weakening the Greenback and supporting USD-denominated gold.

 

Technical Analysis: Short-Term Downward Pressure on Gold Price

 

Gold is currently trading with a softer tone for the day. The precious metal has been forming a descending trend channel on the daily chart since May 10. Despite this, it maintains a bullish sentiment above the key 100-day Exponential Moving Average (EMA). Further consolidation is possible, as the 14-day Relative Strength Index (RSI) hovers around the neutral 50 level, indicating a balance between bullish and bearish positions.

 

The upper boundary of the descending trend channel at $2,350 will be the first resistance level for XAU/USD. Breaking above this level could open the path to $2,387, the high of June 7. Beyond this, the next major resistance is at the all-time high of $2,450.

 

Conversely, the initial support level is the June 21 low of $2,316. Continued selling pressure could push prices down to $2,285, the low of June 7. The critical support zone to watch is between $2,255 and $2,260, which includes the 100-day EMA and the lower boundary of the descending trend channel.

 

 

 

Paraphrasing text from "FX Street" all rights reserved by the original author.

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