GOLD Price Analysis – June 20, 2024
Daily Price Outlook
Despite the bullish US dollar and risk-on sentiment, the safe-haven gold has maintained its upward momentum, staying well bid around the $2,343 level and reaching an intraday high of $2,345. This upward trend can be attributed to geopolitical tensions and uncertainty in financial markets, which have increased demand for safe-haven assets like gold. Furthermore, the previously released weaker-than-expected Retail Sales have fueled speculation of US Federal Reserve (Fed) rate cuts later this year, weighing on the US dollar and contributing to gold's gains.
Looking ahead, investors will focus on several key economic indicators and events in the United States. These include the release of weekly Initial Jobless Claims, Building Permits, Housing Starts, the Philly Fed Manufacturing Index, and a speech by Fed official Neel Kashkari on Thursday. Additionally, on Friday, attention will turn to the preliminary US S&P Global PMI reports for June.
Bullish US Dollar Limits Gold's Upside Amidst Reduced Rate Cut Expectations
Despite earlier expectations and speculation of Federal Reserve interest rate cuts due to weaker Retail Sales data and concerns about economic slowdown, the US dollar is gaining momentum. This was supported by signs of easing inflation and a stabilizing economy. Moreover, an uptick in US Treasury bond yields has increased demand for the USD, contrasting with previous expectations of rate cuts, which typically weaken a currency.
However, the Fed's revised projection of one rate cut this year, down from earlier expectations of three, has further bolstered Treasury yields and limited gold's upward potential. Therefore, the strong US dollar, fueled by diminished expectations of Federal Reserve rate cuts and positive economic indicators, is putting downward pressure on gold prices. Investors are preferring the dollar over precious metals amid economic uncertainty.
Geopolitical Tensions Drive Investors to Safe-Haven Assets
On the geopolitical front, the long-lasting tensions between Israel and Gaza show no signs of slowing down. This can be witnessed by the recent Israeli attacks near the Karem Abu Salem aid crossing in Rafah, which resulted in nine deaths and 30 injuries among civilians awaiting aid trucks.
In Gaza, recent Israeli military actions have claimed 24 lives and left 71 injured, according to the enclave’s Health Ministry. Additionally, a United Nations commission has accused Israeli authorities of committing war crimes and crimes against humanity amid the conflict, which has already resulted in over 37,000 deaths and more than 85,000 injuries since October 7.
Therefore, heightened tensions and the humanitarian crisis in Gaza have driven investors towards safe-haven assets like gold, influencing its price amidst geopolitical uncertainty and escalating conflict in the region.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2331.94, up 0.03%, as it navigates a range-bound environment. The 4-hour chart highlights a pivot point at $2342.00, crucial for assessing the next price movement. Immediate resistance is at $2339.37, followed by $2353.95 and $2369.24. These levels are critical for any bullish advance.
On the downside, immediate support is found at $2308.16, with further support at $2297.24 and $2287.04. These levels are significant to prevent deeper declines. The Relative Strength Index (RSI) is at 59, indicating moderate momentum without overbought conditions, suggesting room for further movement.
The 50-day Exponential Moving Average (EMA) at $2320.59 provides substantial support, reinforcing the current price level. The overall outlook for gold remains cautiously bullish above the $2342.00 pivot point.
A break above this level could enhance bullish momentum, targeting the higher resistance levels. Conversely, a drop below immediate support at $2308.16 might trigger further selling pressure.
The strategic entry point is set to buy above $2326, with a take profit target at $2342 and a stop loss at $2318. This setup aims to capitalize on potential upward movements while managing downside risks.
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