GOLD Price Analysis – June 06, 2023

Daily Price Outlook

The price of gold struggles to capitalize on a minor uptick above the 100-day simple moving average, remaining within a narrow trading range throughout the European session on Tuesday. Currently hovering just above the $1,960 level, the XAU/USD is only a few cents away from a two-month low reached last week.

The demand for the US dollar limits the gains for gold. The USD, which attracts some buying interest after a decline following disappointing US macroeconomic data, becomes a significant factor weighing on the gold price.

Concerns about the slowdown in the largest economy are fueled by a poll by the Institute for Supply Management (ISM) indicating a slight increase in economic activity in the US services sector in May. The Prices Paid sub-component reaching a three-year low further supports the anticipation of a pause in the Federal Reserve’s rate-hiking cycle.

The gold price is oscillating around $1,960 amid mixed reactions to the Fed’s June policy. During the early London session, the precious metal’s price remains uncertain as investors hold differing opinions on the Fed’s decision regarding interest rates at its upcoming monetary policy meeting in June.

US banks, uncertain about extending loans, aim to maintain the quality of their asset portfolios in an unstable environment. The gold price is hindered from making significant movements due to mixed responses to the Fed’s June policy.

At the same time, declining factory activity and below-average service activity suggest a temporary pause in policy tightening to observe the impact of previous rate increases, higher payroll additions in the US labor market support the need for further rate hikes.

GOLD Price Chart – Source: Tradingview

GOLD – Technical Outlook

On Tuesday, the price of gold is trading sideways around the $1959 level, showing difficulty in surpassing the resistance at $1964. It is currently finding support around $1958, which coincides with the 23.6% Fibonacci retracement level and the 50-day exponential moving average on the two-hour timeframe.

If the price breaks below $1958, it may encounter further support levels at $1954 and $1951, which correspond to the 38.2% and 50% Fibonacci retracement levels. Continued downward momentum could push the gold price towards the 61.8% level at $1948.

Monitoring the price action around the $1964 level is crucial, as a break below this level could lead to further downside. Conversely, a breakthrough above $1964 could create opportunities for buying, with potential targets at $1972 or $1980.