GOLD Price Analysis – June 07, 2023

Daily Price Outlook

The Safe-Haven Gold price has successfully stopped its downward trend and has shown signs of recovery, hovering above the $1,960 mark. However, the stability witnessed in gold prices can be attributed to the cautious sentiment among investors, who anxiously anticipate the upcoming Federal Reserve meeting.

This cautious stance has boosted the demand for safe-haven assets, particularly gold, and consequently played a significant role in its recent price gains.

Weak US Economic Data Supports Gold

The safe-haven gold received some support earlier in the week, thanks to weak economic data from the United States. This data caused the US dollar to decline, leading to speculation that the Federal Reserve might face challenges in implementing additional interest rate hikes.

Although, the US dollar managed to recover its strength as uncertainty surrounding the Federal Reserve’s future actions persisted.

Despite indications of a slowdown in the US economy, the presence of continued high inflation and a strong labor market intensified the pressure on the central bank to implement a stricter monetary policy.

Thus, the weak economic data and speculation about the Federal Reserve’s challenges had a positive impact on the safe-haven gold price initially. Although, the recovery of the US dollar was seen as one of the key factors that cap further gains in the gold price.

Fed’s Expected Longer-Term Rate Hike Prospects Dampen Gold Outlook

If the Federal Reserve chooses to end its current cycle of interest rate hikes, it is expected that interest rates will remain high for a prolonged period. Hence, this delivers a challenge for non-yielding assets like gold.

Consequently, the safe-haven appeal of gold has been limited in recent weeks, despite negative data impacting riskier assets. Whereas, the prospect for a US and European recession later in the year could eventually increase the demand for gold.

Economic Indicators and Market Data to Monitor

Looking forward, the market participants will closely monitor key economic indicators from major economies. Australia and Japan are scheduled to release their first-quarter GDP data, providing insights into the health of their respective economies. Besides this, Chinese trade and inflation data are also expected to be released this week.

GOLD Price Chart – Source: Tradingview

GOLD – Technical Outlook

Gold prices continue to exhibit volatility, showing little significant movement since the previous day. This confirms the ongoing bearish trend, with a primary focus on testing the initial level of $1,945.20. A breakthrough at this level would pave the way for further correction towards the subsequent level at $1,913.15.

The Stochastic indicator remains in negative territory, signaling the potential for a sustained bearish wave. It’s worth noting that surpassing the $1,977.25 level would interrupt the expected decline and potentially trigger a bullish reversal.

In today’s trading, the projected range is anticipated to be between support at $1,940.00 and resistance at $1,977.00. Overall, the trend for the day is expected to remain bearish.