Category: Technical Analysis

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Technical Analysis

USD/CAD Price Analysis – May 31, 2023

Daily Price Outlook

Ahead of Wednesday’s European session, USD/CAD experienced a surge in bids, testing a falling resistance line at 1.3650 that has held for two months. The Loonie pair’s action elucidates the market’s cautionary stance in the face of Canada’s first quarter (Q1) 2023 gross domestic product (GDP) data and major risk factors, notably updates on the resolution of the US debt ceiling and Fed projections.

USD/CAD is finding it hard to rally in the wake of oil prices declining near 1.3600 as the US dollar pulls back ahead of significant triggers. USD/CAD is dipping to 1.3600 in the early Asian session on Wednesday in anticipation of Canada’s crucial growth figures.

This is a reversal from Tuesday’s bounce from 1.3567, pulling back from 1.3613. Apprehension surrounding the US Senate’s vote on the debt ceiling deal may also be a snag for the Loonie pair. However, the quote is influenced by a dip in WTI crude oil prices.

Considerable attention is given to month-end rebalancing and the cautious approach preceding major data or events. Mixed US data might also pose a challenge to the dollar. As such, the US Dollar Index (DXY) reached its highest levels since mid-March on Tuesday before snapping a five-day winning streak and recording the largest daily loss since April 19, closing the North American session around 104.05.

Concerns about the ability of US policymakers to avert the looming default have led WTI crude oil to its lowest levels in four weeks, plunging more than 4.0% to register the biggest daily loss since May 2. Additionally, the US drive to tap into the Strategic Petroleum Reserve (SPR) and expectations of elevated oil production exert downward pressure on oil prices.

The US Conference Board’s (CB) Consumer Confidence Index dipped marginally to 102.30 in May from an upwardly revised 103.70 in April (from 101.30). According to additional details in the survey report, consumer inflation expectations for the coming year edged down from 6.2% in April to 6.1% in May.

Moreover, the US House Price Index rose by 0.6% MoM, outperforming the expected 0.2% and the prior 0.7% (revised from 0.5%), while the S&P/Case-Shiller Home Price Indices dropped to -1.1% YoY in March from 0.4% prior and -1.6% expected.

The Dallas Fed Manufacturing Business Index for May declined from -23.4 to -29.1, falling short of market estimates of -19.6.

USD/CAD
USD/CAD Price Chart – Source: Tradingview

USD/CAD – Technical Outlook

During the Asian trading session, the USD/CAD pair displays a positive inclination, hovering around the 1.3635 mark. A glance at the four-hour chart reveals a surge of bullish activity for the Canadian dollar around the 1.3567 mark.

The existence of hammer and spinning top candlestick patterns at this level signifies a possible uptrend for the USD/CAD pair. Furthermore, this point coincides with another trendline observable on the four-hour chart, amplifying the bullish outlook.

In terms of upward movement, the Canadian dollar could face resistance near the 1.3658 mark. A successful rally above this mark could steer the Canadian dollar toward the next resistance level at 1.3698 and potentially even higher towards 1.3745.

On the downward side, immediate support is anticipated around the 1.3580 mark. Should the Canadian dollar dip below this mark, the next aim could be around 1.3500.

In conclusion, keen observation of the 1.3560 level is crucial, as a potential surge above it could provide a chance to take a long position. On the flip side, the vigilance of the 1.3603 level is equally important, as a failure to surge above it may offer an opportunity to enter a short position.

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Technical Analysis

GOLD Price Analysis – May 31, 2023

Daily Price Outlook

The price of Gold (XAU/USD) was unable to extend its successful run, losing some momentum around the $1,950 mark. Although it initially ascended to reach an intraday high, these gains were fleeting as it subsequently retreated back to the $1,950 level. This decrease can be linked to the rising US dollar, which found support from several factors.

In addition, the risk-on market sentiment, bolstered by optimism surrounding the agreement on the US debt ceiling, further lessened the allure of gold as a safe-haven asset. On a brighter note, amid mixed US data and disappointing activity numbers from China, gold prices may find some support. These elements might help curb significant dips in gold prices by influencing the overall market sentiment.

Looking ahead, the market is eagerly waiting for further details concerning the potential increase of the U.S. debt ceiling. If the US Republicans thwart its extension, it could trigger a market shock. In such scenarios, investors typically gravitate towards safe-haven assets like gold. Consequently, the demand for gold may escalate, and buyers are optimistic that gold prices will ascend since it is deemed a reliable gauge of market sentiment and a secure investment during periods of uncertainty.

China’s Manufacturing PMI Contracts in May, Services PMI Beats Expectations

China’s official Manufacturing Purchasing Managers’ Index (PMI) for May registered at 48.8, dropping below the preceding month and falling short of market expectations. This reflects a contraction in the manufacturing sector as the index dipped beneath the 50 threshold.

Contrastingly, the Services PMI for May exceeded the April figures and outperformed expectations. The weaker Manufacturing PMI reading may lead to heightened market uncertainty, which often bodes well for gold prices.

Market observers are eagerly anticipating the disclosure of key economic indicators in the US, encompassing the Chicago PMI and JOLTS Job Openings statistics. These pieces of data, coupled with speeches from influential members of the Federal Open Market Committee (FOMC) and shifts in US bond yields, will notably sway the demand for the US dollar. Furthermore, the overall market sentiment will play a significant part in determining the trajectory of gold prices.

GOLD
GOLD Price Chart – Source: Tradingview

GOLD – Technical Outlook

The valuable commodity gold is currently exhibiting a minor upward trend after bouncing back above the pivotal support threshold of $1940, demonstrating the resilience of this level as forecasted previously.

Presently, a downward trendline may pose substantial resistance around the $1965 mark. If gold succeeds in breaching this level, it is likely to encounter the next immediate hurdle at $1971.

On the flip side, if gold dips below the $1970 mark, the next aim could be the resistance level at $1984. Examining our technical markers, the RSI and MACD indicators along with the 50-day exponential moving average imply a potential continuation of the bullish trend.

Keeping a close watch on the $1950 mark is crucial as a potential breakout could stimulate further ascent. On the decline, robust support is projected around the $1950 threshold, while the principal support level lies at $1940.

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Technical Analysis

BTC/USD Price Analysis – May 31, 2023

Daily Price Outlook

Today’s Bitcoin price stands at $27,117, with a trading volume of $15,859,928,095 in the last 24 hours. The view of Bitcoin mining as a heavily energy-consuming operation is set to change, along with the narrative that accompanies it. Bitcoin is on the path to achieving carbon neutrality as eco-friendly mining practices emerge and awareness increases.

Research indicates that greenhouse gas emissions from global Bitcoin mining have seen more than a 50% reduction over the past three years. In May 2020, Bitcoin mining resulted in emissions of 601 g/KWh, which decreased to 299 g/KWh by May 2023. The term “g/KWh” refers to the grams of CO2 emissions produced per kilowatt-hour of electricity. Lower g/KWh figures indicate cleaner energy production and reduced carbon emissions.

Furthermore, Bitcoin mining is nearing carbon neutrality and might even reach a point of being net carbon negative if current trends continue. Few blockchains, including Polygon and Solana, have achieved this in the past.

If Bitcoin accomplishes this, it will debunk the persistent misconception that “Bitcoin mining excessively consumes energy and harms the environment”. This notion was the main driver behind Elon Musk’s decision to halt Bitcoin payments at Tesla, triggering a market crash in May 2021.

A legislative effort in Texas aimed at limiting the participation of Bitcoin miners in industries that help conserve grid costs failed to advance past a committee in the state House of Representatives earlier this week.

The program incentivizes miners to halt their operations whenever there’s a surge in power grid demand. The proposed bill would have ceased these tax incentives while restricting miner involvement to a mere 10%.

Bitcoin miners are currently rebuilding their reserves after a sharp decrease that started in May last year and continued throughout 2022. The miners are utilizing a portion of their remaining assets to sustain their operations. Over the last month and a half, miners have sold approximately $5 billion worth of Bitcoin from their reserves to support their mining activities.

Despite experiencing losses and uncertain future profits from Bitcoin prices, the persistent increase in hash rate suggests that miners are continuing to run their equipment. They remain hopeful for potential future rewards, a wait that might take some time.

BTC/USD
BTC/USD Price Chart – Source: Tradingview

BTC/USD – Technical Outlook

Bitcoin is currently facing significant selling pressure after breaking below the important $27,500 threshold, which previously served as a strong support for the cryptocurrency. The four-hour chart demonstrates not just a break of the 50% Fibonacci retracement level, but also a breach of the Alpha trend line, which further strengthens the bearish sentiment.

The appearance of a bearish engulfing candlestick pattern further solidifies the ongoing downward trend. Bitcoin has already reached the 61.8% Fibonacci retracement level at $27,250 and seems to be heading towards the next critical support at the 78.6% Fibonacci level, roughly around $26,950.

A successful rise above the $27,950 mark could potentially push Bitcoin’s price toward the next support zone at $26,500.  A decisive break above the crucial level of $26,500 is likely to spark a bullish rally for Bitcoin’s price.

On the upside, we expect a resurgence of the previously breached resistance level around $27,300, followed by the next resistance at $27,500. Furthermore, if the positive trend continues, Bitcoin could potentially challenge the next resistance level at $28,000.

In conclusion, careful observation of the $27,500 level is vital as it acts as a key support zone, while also staying alert for potential rebound opportunities around the $26,500 level for Bitcoin.

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Technical Analysis

GOLD Price Analysis – May 30, 2023

Daily Price Outlook

The XAU/USD (Gold) failed to stop its downward rally as it hit a two-month low, falling just below the $1,940 level. The selling pressure intensified during the early European session on Tuesday, resulting in the gold price hitting its lowest point since March 17. However, the downward trend could be attributed to the ongoing optimism surrounding the US debt ceiling and the strength of the US Dollar, which are playing a significant role in exerting pressure on the safe-haven appeal of XAU/USD.

US Lawmakers Reach Tentative Agreement to Raise Debt Ceiling, Impacting Investor Confidence and Gold Prices

In a significant development, US lawmakers have recently announced a tentative agreement to raise the debt ceiling, which currently stands at $31.4 trillion. This agreement holds immense importance as it helps prevent the possibility of a default by the world’s largest economy.

Consequently, investors are feeling more confident now and are inclined to invest in riskier assets, creating an overall positive market sentiment. Hence, this shift in investor behavior puts downward pressure on safe-haven assets like gold. Additionally, the recent strong performance of the US Dollar, reaching a two-month high, further contributes to the decline in gold prices.

US Dollar Gains Strength Amid Expectations of Rate Hike and Inflationary Pressures

Despite the prevailing risk-on sentiment in the market, the US dollar has been gaining strength. This can be attributed to a change in investors’ expectations, as they have started anticipating a higher probability of a 0.25% interest rate hike in June.

This change in sentiment was triggered by more hawkish comments made by officials from the Federal Reserve.

Additionally, recent data revealing an unexpected rise in the PCE Price Index, a key measure of inflation favored by the Fed, indicated that inflationary pressures continue. As a result, market expectations have solidified, with investors anticipating the Fed to maintain higher interest rates for a longer period. This has bolstered the US dollar and led to a decline in gold prices.

GOLD
GOLD Price Chart – Source: Tradingview

GOLD – Technical Outlook

The price of gold is currently facing a hurdle in surpassing the $1,970 level on Tuesday, leading to a period of consolidation. Support is being found around the $1,938 level, and a breach below this level has the potential to push gold towards the next support at $1,920 or possibly even lower at $1,915.

Upon analyzing the technical indicators, both the RSI and MACD show bearish signals. The RSI has dropped below the 50 level, indicating a strong selling pressure affecting gold prices. Additionally, the MACD is forming shorter histograms, further confirming the prevailing bearish sentiment.

Currently, the double bottom pattern provides significant support at $1,938. A successful break below this level would likely sustain the downward trend in gold.

On the four-hour timeframe, there exists a downward trend line acting as a prominent resistance for gold. If there is a breakthrough above this trend line, it suggests a possible continuation of the selling pressure below the $1,955 level.

It is crucial to closely monitor the $1,938 level. If gold remains above this level, there is a chance of a corrective bounce towards $1,955. However, breaching below $1,955 could indicate renewed selling interest in the precious metal.

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Technical Analysis

AUD/USD Price Analysis – May 30, 2023

Daily Price Outlook

During the early European session, the AUD/USD pair is declining towards the psychological support level of 0.6500. The Australian currency is facing significant selling pressure due to the US Dollar Index (DXY) reaching a new 10-week high at 104.45. This is driven by expectations of the Federal Reserve (Fed) continuing to raise interest rates to address persistent inflation in the United States.

Investors are cautious about the trading day on Tuesday, following a long weekend, leading to a reduction in gains made in the Asian session for S&P 500 futures. The anticipation of another interest rate hike from the Federal Reserve has created a sense of caution in the market.

The US Dollar Index (DXY) has regained its 10-week high as investors shift their focus from the US debt ceiling issue to the Federal Reserve’s upcoming monetary policy meeting in June.

The announcement of an increase in the US borrowing cap by the White House has put pressure on US Treasury yields, causing the 10-year US government bond yields to drop below 3.77%.

The release of US employment data this week will serve as a basis for the Federal Reserve’s decision on monetary policy in June.

The first employment statistic, US JOLTS Job Openings data, will be released on Wednesday. It is expected to show a decline to 9.35 million from the previous release of 9.59 million, indicating a slowdown in hiring by businesses due to a less optimistic economic outlook. The May employment change data from US Automatic Data Processing (ADP) will also be discussed.

According to estimates, the US economy added 170,000 new jobs in May, compared to the previous month’s addition of 269,000. The Nonfarm Payroll (NFP) data, to be released at the end of the week, will be crucial in assessing the labor market’s performance.

AUD/USD
AUD/USD Price Chart – Source: Tradingview

AUD/USD – Technical Outlook

The AUD/USD pair is currently experiencing a significant bearish sentiment near the 0.6515 level. The selling pressure intensified when the pair was unable to surpass the 38.2% Fibonacci retracement level, which acted as a strong resistance around 0.6555. The candlestick patterns closing below this level indicate a potential continuation of the downtrend in the Australian dollar.

On the four-hour timeframe, the RSI is below 50, indicating a bearish bias, while the MACD is showing smaller histograms compared to previous ones, suggesting a strong selling pressure in the AUD/USD pair.

Moreover, the 50-day moving average is acting as a resistance around the 0.6520 level, and the candlestick closing below this moving average supports the possibility of further bearish continuation.

Consequently, the outlook for the AUD/USD currency pair today is bearish. It is important to monitor the 0.6530 level and consider short positions with a target around the 0.6489 level.

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S&P500 (SPX) Price Analysis – May 30, 2023

Daily Price Outlook

The global market sentiment continued its upward rally on Tuesday, maintaining a positive outlook. Investors reacted with optimism to the recent agreement in the US that aims to prevent a potential default.

This positive sentiment is bolstered by robust economic data from the US, indicating strength in the world’s largest economy. Despite worries about the impact of rising inflation on purchasing power, there is a hopeful outlook that the economy can avoid a recession.

The S&P 500 Futures, which indicate market expectations, show modest gains around 4,220, following a retreat from the yearly high seen the previous day.

Similarly, the yield on the US 10-year Treasury bond has dropped by five basis points (bps) to 3.76%, while the two-year yield has reversed from an 11-week high and is showing its first daily loss since May 11, currently standing around 4.58%.

Markets in the US, Germany, Switzerland, and the UK were closed the previous day, so traders couldn’t react to the news of the US policymakers reaching an agreement to extend the debt ceiling until January 2025.

However, this sets the stage for a positive start to the trading week, as traders are hopeful that the agreement will prevent a potential US debt default. They are optimistic about the situation and expect a good week of trading ahead.

Debt Ceiling Agreement Reached, but Opposition Looms in Congress

US President Joe Biden and top Republican Kevin McCarthy have reached a preliminary agreement to raise the US government’s debt ceiling until January 2025. President Biden is urging Congress to pass the deal, and McCarthy is confident it will be approved in the House.

Conversely, some Republican policymakers are opposing the compromises made in the debt ceiling agreement and are prepared to challenge it in both the House and the Senate. This has created uncertainty in the market and has led to the US Dollar maintaining its strength.

Economic Worries in Eurozone and US-China Tensions Dampen Market Sentiment

Furthermore, the ongoing concerns about a possible recession in the Eurozone have emerged due to a downward revision of Germany’s Q1 GDP figures. This and ongoing tensions between the US and China dampen market sentiment. Additionally, China has declined a request from the US for a meeting of Defense Chiefs in Singapore, as the Wall Street Journal reported.

Therefore, the downward revision of Germany’s Q1 GDP figures raises worries about the region’s overall economic health. Moreover, ongoing tensions between the US and China add to the uncertainty and contribute to a cautious market outlook. China’s rejection of the US request for a Defense Chiefs meeting further exacerbates the geopolitical tensions.

Hence, these factors create an environment of increased risk and uncertainty, potentially affecting investment decisions and market performance.

Upcoming Key Events to Watch: Eurozone and US Sentiment, US Default News, and US Jobs Report

It is important to keep an eye on sentiment numbers from the Eurozone and the US. These numbers will provide valuable information, especially in light of the recent increase in expectations of the Federal Reserve adopting a more hawkish stance.

Additionally, monitoring the market’s reaction to the latest news regarding the US default is crucial. Furthermore, the US jobs report on Friday will be a key event to pay attention.

SPX
SPX Price Chart – Source: Tradingview

SPX S&P500 – Technical Outlook

The S&P 500 is currently experiencing some volatility as we enter the middle of the trading week. Today, the focus will be on the release of consumer confidence data from the US economy, which is expected to have an impact on the price action of the S&P 500.

Currently, the index is trading around the 4205 level and facing resistance around 4210. This level has now formed a double top pattern, indicating a potential reversal. The formation of bearish candlesticks below the 50-day exponential moving average further supports the possibility of a bearish continuation.

However, before we see a potential bearish continuation, there is a possibility of a minor correction in the S&P 500, with support expected around the 4175 level or even down to 4150. Today, it is important to monitor the 4215 level as it is likely to act as a pivot point.

Below this level, we can expect a bearish sentiment, while above it, a bullish sentiment may prevail. A break above the 4215 level could expose the S&P 500 to higher levels such as 4250 or even 4299. On the downside, key support levels are likely to be found around 4150 and 4103.

Let’s keep a close eye on these levels and observe the price action of the S&P 500 throughout the day.

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EUR/USD Price Analysis – May 29, 2023

Daily Price Outlook

EUR/USD, which recently hit multi-week lows just above the key 1.0700 level, has since stabilized and is trading in the low-1.0700s on Monday. This recovery can be attributed to the overall lack of market direction and the Memorial Day holiday in the US, leading to limited trading activity and volatility.

Despite the agreement on the USD debt ceiling, the FX market has shown minimal response thus far. However, European stock markets have opened on a positive note.

Investors remain hopeful that the agreement to raise the US debt ceiling will gain approval from a divided Congress, thereby averting a potential government default. This positive sentiment has provided some support for the euro.

Key factors to monitor for the euro include the price action around the 1.0700 area in EUR/USD and the contrasting approaches of the Federal Reserve (Fed) and the European Central Bank (ECB) regarding their interest rate plans.

Looking ahead, any hawkish statements from the ECB could bolster expectations for further rate hikes, although specific regional economic indicators have shown a loss of momentum.

EUR/USD
EUR/USD Price Chart – Source: Tradingview

EUR/USD – Technical Outlook

On the technical side, the EUR/USD currency pair is displaying a somewhat bullish trend following substantial support found around the 1.0706 level. Currently, the Euro has surpassed the 50-day exponential moving average (EMA), which is now acting as additional support at the 1.0717 level.

A potential hurdle is anticipated around the 1.0740 level, marked by a descending trendline visible on the four-hour timeframe.

If the EUR/USD pair successfully breaks above the 1.0740 level, it has the potential to reach the 1.0760 level. However, it should be noted that the pair is currently trading within a narrow range, bounded by 1.0760 on the upside and 1.0706 on the downside. While the pair remains within this range, we can expect a volatile trading session.

Nevertheless, if the Euro falls below the 1.0706 level, there may be an opportunity to short the EUR/USD pair. It is important to closely monitor the 1.0700 level, as a breach below it could present another opportunity to initiate a short position on the EUR/USD pair.

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GOLD Price Analysis – May 29, 2023

Daily Price Outlook

Gold price (XAU/USD) retreats from its intraday high of $1,941 as it fails to react positively to the initial agreement reached by US policymakers to avert a potential default. The Federal Reserve’s hawkish stance and uncertainty surrounding the passage of the agreement through Congress are factors influencing the decision of XAU/USD.

Despite the recent deal on extending the US debt limit, market concerns about a potential default persist, and some policymakers’ approval of the deal may be the reason behind this sentiment. However, the agreement faces opposition from both radical left and right factions due to the compromises made by each party.

To prevent a catastrophic default, the debt ceiling agreement needs to pass the House on Wednesday and the Senate by June 5. US Vice President Joe Biden has strongly urged both chambers to approve the agreement.

Given the significance of the US debt ceiling deal and the proximity of key short-term technical support, caution is advised for gold sellers ahead of the release of the US nonfarm payroll data.

Positive US economic data and expectations of a hawkish Federal Reserve stance also contribute to gold selling pressure. Upbeat readings in US PMIs, Q1 2023 GDP second estimate, durable goods orders, and the Core PCE Price Index indicate strength in the economy. Notably, US durable goods orders for April surpassed expectations, showing an increase of 1.1% compared to the predicted -1.0%.

Moreover, core durable goods orders, excluding aircraft, rose by 1.4% against the expected -0.2%. The Core PCE Price Index for the same month exceeded market expectations, reaching 0.4% MoM and 4.7% YoY.

GOLD
GOLD Price Chart – Source: Tradingview

GOLD – Technical Outlook

Gold, the valuable metal, is currently exhibiting a slightly bullish sentiment following a significant level of support of around $1,940. Its current trading position is around $1,948, accompanied by a bullish candlestick pattern that suggests a dominant presence of buyers in the market.

On the four-hour timeframe, Gold has successfully surpassed the 50-day exponential moving average (EMA), which previously acted as resistance at $1,945.

If Gold manages to sustain candlestick closures above the 50-day EMA, it may present an opportunity for long positions, with the next resistance levels targeted at $1,960 or $1,965. The robust support at $1,940, if maintained, will be crucial, and any breach could lead to the next support level of around $1,927.11.

Alternatively, if Gold surpasses the $1,965 level, the next potential target lies at $1,975 or $1,984.

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BTC/USD Price Analysis – May 29, 2023

Daily Price Outlook

Bitcoin is currently trading at $27,983.81 per BTC/USD, with a market capitalization of $542.52 billion USD. The daily trading volume stands at $15.97 billion. The recent release of US core Personal Consumption Expenditures (PCE) inflation data for April, which exceeded expectations, caused a decline in the price of bitcoin.

The asset briefly dropped below $26,400 as market participants reacted, leading to increased selling pressure. However, the price quickly rebounded to its pre-data level.

Market participants had anticipated interest rate cuts from the US Federal Reserve, but the higher-than-expected US core PCE inflation rate of 0.4% MoM and 4.7% YoY raised expectations of a potential interest rate hike.

The increased selling pressure is expected to delay Bitcoin’s ascent to its target of $30,000. Market conditions for risk assets are not as favorable as traders had anticipated, and further market events could intensify selling pressure on Bitcoin and Ethereum.

Currently, the price of bitcoin is falling, and the publication of US PCE inflation data has added to its volatility. BTC may find support at previous resistance levels of $26,348 and $26,220.

There has been a capital inflow into Bitcoin following the news of an agreement between Republican Kevin McCarthy and US President Joe Biden to raise the country’s debt ceiling. This development has led to a 2% price increase in Bitcoin today.

It aligns with former Wall Street trader Macrojack’s belief that Bitcoin is a valuable asset amid concerns about increased money printing by the Federal Reserve, which negatively impacts the USD but positively affects BTC due to their inverse trading relationship.

BTC/USD
BTC/USD Price Chart – Source: Tradingview

BTC/USD – Technical Outlook

Bitcoin is currently facing a significant obstacle at the $28,300 level, which is highlighted by the ‘double tap’ pattern observed on the four-hour timeframe. The repeated candle closures below this level indicate exhaustion among buyers and suggest a possible shift in market control towards sellers.

Key technical indicators, such as the RSI and MACD, are signaling overbought conditions, with the RSI hovering around 76.75 and the MACD showing extended histograms at around 171. Additionally, there is a notable divergence between the 50-day exponential moving average (EMA) at approximately $27,000 and the current market price of Bitcoin, which is close to $28,000. This divergence suggests an overbought market and implies the potential for a price correction.

If Bitcoin fails to break the $28,300 level, there may be an opportunity for investors to short Bitcoin below $28,300, targeting price levels of $27,500 or even $27,000. On the other hand, a successful breach and close above $28,300 could prompt investors to take a long position, with an initial target set at $29,000, and potentially higher towards $29,450.

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GOLD Price Analysis – May 26, 2023

Daily Price Outlook

The price of gold (XAU/USD) has trimmed its weekly losses to the lowest levels in two months as investors await crucial US data and the resolution of the debt ceiling issue.

The recent bounce in the precious metal could be attributed to the US dollar pulling back from its multi-day high, as reports suggest that policymakers are still working to avoid a US default.

However, revised US real GDP and activity data support expectations of a hawkish stance from the Federal Reserve, despite mixed statements from officials recently, which are exerting downward pressure on XAU/USD.

Moving forward, the outcome of the US debt ceiling negotiations will be crucial in determining market movements as the early June deadline approaches.

Additionally, the April US Durable Goods Orders and the Core Personal Consumption Expenditure (PCE) Price Index, which is a favored inflation gauge of the Fed, will be closely watched for clearer direction.

The upcoming US durable goods orders report on Friday will be closely monitored. The April Durable Goods Orders data is expected to show a decline of 1.0%, contrasting with the previous increase of 3.2%. Any decrease in durable goods orders would significantly impact the core Consumer Price Index (CPI), which has exhibited notable resilience.

GOLD
GOLD  Price Chart – Source: Tradingview

GOLD – Technical Outlook

Gold witnessed a decline on Friday, with support found near the $1,936 level. Upon analyzing the 4-hour timeframe, it appears that gold might experience a bullish trend due to the formation of a doji candlestick pattern. Furthermore, the presence of an engulfing candlestick pattern suggests a weakening bearish sentiment and a potential shift towards a bullish sentiment.

The immediate resistance level for gold is anticipated to be around $1,955. If there is a surge in demand for precious metals, gold could surpass the $1,955 level and aim for the next resistance at $1,965. Conversely, support for gold is identified near the $1,935 level, and a breach below this level may lead to further decline towards $1,919.

It is crucial to monitor the US economy’s core durable goods orders and UoM consumer sentiment as they can influence the price movement of gold and the US dollar.