GOLD Price Analysis – April 17, 2023
Daily Price Outlook
Gold (XAU/USD) remains stable at around $2,005. Gold prices have steadied after significant profit-taking was prompted by hawkish comments from Federal Reserve officials regarding the probable direction of interest rate increases.
US Economic Data and Its Impact on Gold Prices
US retail sales for March decreased by 1.0% on Friday, falling short of the -0.4% forecast and a -0.2% decline in February. The preliminary result for April's University of Michigan's (UoM) Consumer Confidence Index was also encouraging, increasing to 63.5 from 62.0, surpassing analysts' estimates and previous readings. Moreover, April saw a rise in year-ahead inflation estimates from 3.6% to 4.6%.
Due to the ongoing weakness in core US retail sales and an increase in short-term inflation forecasts, expectations for an interest rate hike in May grew, causing the dollar to rebound from a one-year low.
The strengthening dollar put pressure on the XAU/USD pair. Consequently, the surge in gold prices pauses just below the recent multi-month high, presenting a challenge for the bulls.
Hawkish Fed officials
Hawkish remarks from Federal Reserve members regarding interest rate hikes have bolstered the dollar. In a Reuters interview on Friday, Raphael Bostic, president of the Atlanta Federal Reserve (Fed), suggested that recent events align with one more rate increase.
Similarly, Fed Governor Christopher Waller stated that more rate hikes are needed, as data shows the Fed has not made significant progress toward its inflation target.
On the other hand, Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said in a CNBC interview on Friday that he still needs to review the data.
The market anticipates the Federal Reserve to hike rates by 25 basis points on May 2-3, followed by a possible cut in June. According to CME Group's Fedwatch tool, expectations for a 25 bps rate increase in May rose to 81%.
Both the 10-year and 2-year US Treasury bond rates increased by around 3.0% to 3.53% and 4.10%, respectively. The US Dollar Index (DXY), which had been rising for three consecutive days, reached 101.72, marking a 0.17% increase in 24 hours. As the US dollar and US Treasury bond rates rebounded, demand and price for the safe-haven asset, gold, decreased.
Chinese Defense Minister Commends Military Cooperation
On Sunday, Russian President Vladimir Putin and Chinese Defence Minister Li Shangfu met in Moscow. Both men praised the military partnership between the two countries, which have vowed a "no limits" alliance.
According to Li, the nations' relations "perform better than the military-political unions of the Cold War era." They are extremely stable and built on the nonalignment concept.
Additionally, the US Dollar price has recently been affected by Russia's desire for the Chinese Yuan and Brazil's preference for using a different currency for international trade.
Daily Technical Levels:
Support Resistance
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XAU/USD – Technical Outlook
The gold price has confirmed the breach of the bullish channel's support line after closing previous sessions below it, initiating a bearish correction for the upward trend that began at the $1,809.35 mark. The price is currently testing the 23.6% Fibonacci correction level at $1,992.20, and breaking this level is necessary to confirm a rally toward the next correctional level at $1,957.30.
As a result, we anticipate negative trading in the upcoming sessions, reinforced by the price remaining below the EMA50. It is important to note that surpassing the $2,020.00 level would halt the expected negative pressure, allowing the price to resume its primary bullish trend. For today, the expected trading range is between $1,980.00 support and $2,015.00 resistance.
Related:
* EUR/USD Price Analysis – April 17, 2023
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