GOLD Price Analysis – June 13, 2024
Daily Price Outlook
Gold prices (XAU/USD) continued their bearish trend, staying around 2,315.81 after hitting an intraday low of 2,308.28. This downward movement can be attributed to improved market sentiment, reducing demand for safe-haven assets like gold. Additionally, expectations of fewer Fed rate cuts have strengthened the US dollar, further pressuring gold prices.
Looking ahead, traders appear hesitant to take strong positions as they closely monitor Thursday's US economic docket, which includes the Producer Price Index (PPI) and Weekly Initial Jobless Claims data, for short-term trading opportunities.
Hawkish Fed Stance and Stronger US Dollar Drive Gold Prices Lower Amid Unchanged CPI and Lower Core Inflation
On the US front, the broad-based US dollar has been gaining momentum due to a hawkish Fed stance on rate cuts. This bullish US dollar is seen as a key factor keeping gold prices lower.
The Federal Reserve's recent decision surprised markets by projecting only one interest rate cut in 2024, down from the three cuts expected in March. This hawkish stance overshadowed softer US consumer inflation figures and led to higher US Treasury bond yields, boosting the US dollar.
As a result, this shift drove investment away from non-yielding assets like gold, causing its price to drop. The Fed also raised its forecast for the neutral rate to 2.8% from 2.6%, further supporting the US dollar and diminishing the appeal of USD-denominated gold.
On the data front, the US Bureau of Labor Statistics (BLS) reported that inflation, measured by the Consumer Price Index (CPI), was unchanged in May for the first time since last June.
The annual inflation rate slightly decreased to 3.3% from 3.4%. The core CPI, which excludes food and energy prices, increased by 0.2% in May and rose 3.4% over the past year, down from a 3.6% increase in April and below the expected 3.5%.
Therefore, the hawkish Fed stance and stronger US dollar, alongside unchanged CPI and lower core inflation, have driven investment away from gold, resulting in a drop in gold prices.
Geopolitical Unrest Boosts Demand for Safe-Haven Assets like Gold
On the geopolitical front, ongoing tensions in the Middle East and Europe have supported the safe-haven appeal of Gold. Israeli attacks on two homes in the Nuseirat refugee camp killed five and wounded 17, while explosives were used to destroy buildings in Rafah. Gaza officials report 15,694 children killed and 17,000 left without parents after 250 days of war.
Hamas claims to have shown willingness to reach a ceasefire with Israel, though US Secretary of State Blinken says some proposals are unworkable. Since October 7, the conflict has resulted in at least 37,202 deaths and 84,932 injuries in Gaza.
Therefore, this geopolitical unrest tends to increase demand for safe-haven assets like gold and silver, providing a boost to their prices.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2313.655, down 0.48% in today's session. The price action reveals a bearish sentiment as the metal continues to slide, approaching significant support levels. The key pivot point to monitor is at $2318.74, a crucial level that could dictate the next directional move for gold.
Immediate resistance is located at $2339.29, followed by $2354.43 and $2370.11. These levels represent potential hurdles for any bullish attempts to recover.
On the downside, immediate support is at $2299.69, with further supports at $2287.11 and $2271.29, which could act as critical levels where buying interest may emerge to counter the selling pressure.
The Relative Strength Index (RSI) stands at 46, indicating a slight bearish bias but not yet in oversold territory, suggesting there could be more room for downside movement.
The 50-day Exponential Moving Average (EMA) is at $2314.78, marginally above the current price, reinforcing the bearish outlook as gold trades below this key moving average.
In conclusion, the technical outlook for gold suggests a bearish trend below the $2319 level. An entry point for a sell position is advisable below $2319, with a target take profit level set at $2305. A stop loss should be placed at $2328 to manage potential upward reversals.
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