GOLD Price Analysis – July 04, 2023

Daily Price Outlook

Gold is trading at 1,934 increasing by 0.23 percent on Tuesday. Gold prices extended its gains and rose for the second day on Tuesday mainly because of the US dollar weakness.

As lower United States data weigh on the US dollar, the price of gold rises

Despite the declining US Dollar and dismissive attitude towards the Federal Reserve's aggressive predictions, the Gold Price demonstrates optimism in response to lackluster US economic data. On Monday, the ISM Manufacturing PMI for the US dropped to 46.0, falling below both the predicted 47.2 and the previous month's 46.9. This marks the lowest reading in three years and the seventh consecutive month below the critical 50.0 level.

Concurrently, the US Dollar Index (DXY), which gauges the greenback's value against a basket of six major currencies, has experienced a decline of -0.06%, settling at a value of 102.93. This decline has provided some upward momentum for gold prices.

It is worth noting that despite an increase in the US Personal Consumption Expenditure (PCE) Price Index, the US Gross Domestic Product (GDP) and Durable Goods Orders, announced last week, did not experience growth. Furthermore, personal expenditure decreased, undermining the Federal Reserve's assertive stance and bolstering the upward trajectory of gold prices.

China and India news attracts XAU/USD bulls

Furthermore, India and China, the top buyers of XAU/USD, play a role in boosting gold's value. Foreign portfolio investors (FPIs) have recently flocked to India, raising concerns about the country's significant gold demand.

In the past ten months, FPIs have recorded their highest investments in India, marking the fourth consecutive gain.

Gold traders' reactions to US Treasury Secretary Janet Yellen's upcoming trip to China are conflicting. Although the news seems positive, Secretary Yellen is expected to address human rights violations against the Uyghur Muslim minority. Additionally, rising US Treasury bond rates and concerns about China provide further support to gold prices due to its safe-haven status.

GOLD Price Chart – Source: Tradingview

Gold (XAU/USD) Technical analysis

Gold prices exhibited notable upward movement in recent sessions as they approached the resistance of the bearish channel.

However, they encountered strong resistance at $1,929.00, leading to a subsequent decline and a potential return to the channel. Stochastic indicators continue to provide negative signals.

As a result, we anticipate a negative trend in the upcoming sessions, with an initial target of breaking $1,913.15 to confirm the path towards $1,873.50.

It is worth noting that a breach of $1,929.00 would likely propel the price towards further gains, with the next positive milestone at $1,945.20.

The projected trading range for today is expected to fluctuate between support at $1,900.00 and resistance at $1,935.00.