Daily Price Outlook
Gold prices experienced a notable increase, with rising open interest and volume suggesting the potential for further upside in the near future. However, to break out of the current consolidation phase, bullion needs to surpass the monthly resistance level of around $1980 per troy ounce.
The price of gold (XAU/USD) is currently struggling to maintain its recovery from a three-month low as investors seek additional confirmation amid uncertainties surrounding an upcoming rate hike in July. Mixed US data and traders’ skepticism about the Fed’s rate hike plans pose challenges for gold bulls.
Concerns over a potential stall in China’s economic recovery, despite the nation’s efforts to expedite major projects, are putting downward pressure on the gold price.
Furthermore, the cautious atmosphere ahead of mid-US data and Fed Chair Jerome Powell’s upcoming testimony adds to the challenges faced by XAU/USD optimists, especially considering this week’s central bank actions.
On Friday, the gold price remained steady above the $1,955 level, trading within a tight range during the Asian session. It is currently comfortably situated within the trading range observed in recent weeks.
The bearish US dollar is supporting the gold price, as expectations of the Federal Reserve nearing the end of its rate-hiking cycle dampen the dollar’s progress.
This has led to a decline in US Treasury bond yields, weighing on USD bulls and potentially bolstering the price of gold denominated in US dollars. However, given the more pessimistic outlook adopted by major central banks, significant upward movement still appears challenging.
GOLD Price Chart – Source: Tradingview
Gold – Technical Analysis
Gold prices are currently near the resistance level of a bearish correctional channel, and the Stochastic indicators suggest that the market is overbought. This indicates a possible shift in momentum towards the downside, potentially leading to a bearish rebound and continuation of the overall downtrend. A break below the $1,945.20 level would confirm the bearish scenario, with the next target around $1,913.15.
Given these factors, our outlook for gold remains bearish in the near future. However, if gold manages to consolidate above $1,956.50, it could experience short-term gains and test a significant resistance level at $1,977.25 before any potential decline.
For today’s trading, we anticipate a range between the support level of $1,935.00 and the resistance level of $1,970.00.
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