GOLD Price Analysis – June 08, 2023

Daily Price Outlook

The price of gold (XAU/USD) attempted a recovery after falling to around $1,940.00. The precious metal’s price has risen due to a significant decline in the US Dollar Index (DXY), closing at $1,950.00. However, investors have had to remain vigilant amidst the overall volatility in the USD Index, which has been limited by a lack of clear catalysts.

S&P 500 futures have fully recovered from their losses and turned positive, signaling a rebound in risk appetite among market participants. Investors are starting to overlook concerns surrounding potential interest rate hikes by the Federal Reserve (Fed).

While the USD Index has found temporary support around 103.80, the current market optimism poses risks to its strength. Despite the recent short-term decline, the USD Index is expected to remain robust due to the anticipated hawkish stance of the Fed.

Following its failure to break above the critical resistance level of $1,950.00 during the European session, the price of gold (XAU/USD) has seen a significant drop.

The precious metal’s price had rallied significantly on the improved likelihood of the Federal Reserve (Fed) continuing its cycle of interest rate hikes and the conclusion of the corrective movement in the US Dollar Index (DXY).

Although S&P 500 futures have partially recovered from the losses observed in the Asian session, overall market sentiment remains cautious as investors worry about the Fed’s potential impact of further interest rate increases on the economic outlook.

Wednesday’s decline in gold prices was accompanied by rising open interest and volume, indicating a likely continuation of the short-term downtrend. In contrast, it suggests that gold may retest its recent lows around $1,930 per troy ounce.

GOLD Price Chart – Source: Tradingview

GOLD – Technical Outlook

On Thursday, the price of gold is trading in a range around the $1943 level after bouncing off the support level at $1939. It made an attempt to break above $1948 but failed to sustain above this level and is currently consolidating.

The overall trading sentiment for gold appears to be bearish as indicated by the relative strength index (RSI) and moving average convergence divergence (MACD) indicators.

The RSI has a value of 38, suggesting selling pressure, while the MACD is holding around -3. Additionally, the 50-day exponential moving average is acting as resistance around the $1950 level, indicating a stronger bearish sentiment.

If gold breaks below the $1939 level, it could potentially reach the target of $1932 and continue its downward trend towards $1923 and $1990. On the other hand, if gold surpasses the $1948 level, the next target could be around $1955 or $1958.

Therefore, it is important to monitor the price action around the $1948 level as a break below this level may signal a continuation of the downward trend in the price of gold.