GOLD Price Analysis – June 27, 2024
Daily Price Outlook
Gold (XAU/USD) managed to stop its downward rally and regain strength above the 2,314 level, hitting an intraday high of 2,315. The strength in gold prices can be attributed to the bearish US dollar, which lost ground due to uncertainty over the likely timing and number of Fed rate cuts this year.
Despite the Federal Reserve adopting a more hawkish stance at the end of the June meeting, the markets are still pricing in a greater chance of the first rate cut by the Fed in September and about two 25 basis point cuts by the year-end. This kept the US dollar lower and contributed to gold gains.
Meanwhile, the global market sentiment has been showing a positive bullish trend as evidenced by the upbeat performance of the S&P 500, which hit an intraday high of 5,483.14.
This was bolstered by market expectations of potential Federal Reserve rate cuts, with investors pricing in a higher likelihood of a first cut in September and possibly two cuts by year-end.
This sentiment has lifted equity markets, as lower interest rates typically support corporate earnings and economic growth, driving optimism despite lingering uncertainties in global trade and economic data. Hence, the positive sentiment was seen as a key factor that kept a lid on any additional gains in the gold price.
Impact of US Dollar Weakness and Fed Rate Cut Uncertainty on Gold Prices Amid Key Economic Data and Upcoming US Presidential Debate
On the US front, the broad-based US dollar lost some of its traction and turned bearish, possibly due to the uncertainty over the likely timing and number of Fed rate cuts this year.
The Fed projected only one rate cut in 2024, though the markets are still pricing in a greater chance of the first rate cut by the Fed in September and about two 25 basis point cuts by the year-end. This keeps the US dollar lower and contributed to the gold gains.
Moving ahead, traders are cautious before the US presidential debate and the release of the PCE Price Index on Friday. Key data on Thursday, including Q1 GDP, Durable Goods Orders, Jobless Claims, and Pending Home Sales, may offer some direction ahead of these events.
Therefore, the uncertainty over Fed rate cuts and a weaker US dollar have boosted gold prices. Meanwhile, the economic data and the upcoming US presidential debate add to market caution, influencing gold's near-term direction as traders await the PCE Price Index release.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) has shown a modest rise to $2303.75, marking a 0.21% increase. The market continues to navigate within a constrained range, reflecting cautious sentiment amid various global economic influences.
Immediate resistance levels are noted at $2296.33, $2312.08, and $2322.30. On the downside, immediate support levels are positioned at $2328.90, $2286.75, and $2279.51. These levels are critical as they could signal potential shifts in market direction.
The Relative Strength Index (RSI) stands at 38, indicating a neutral to slightly oversold condition, which might suggest a potential for upward movement if the buying momentum increases.
The 50-day Exponential Moving Average (EMA) is currently at $2322.37, serving as a significant resistance level. A breach above this EMA could further strengthen the bullish outlook.
Given the current technical setup, a buy entry above $2297 is recommended, with a target take profit at $2312 and a stop loss set at $2286. This strategy leverages the current support and resistance levels to maximize potential gains while mitigating risks. Gold remains slightly bullish above the pivot point of $2297.
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