Technical Analysis

Gold Price Analysis – May 02, 2024

By LonghornFX Technical Analysis
May 2, 20243 min

Daily Price Outlook

Despite reports of Israel impeding aid missions to Gaza, the safe-haven Gold price (XAU/USD) was unable to halt its previous day's downward trend, remaining bearish around the $2,299.18 level and hitting an intraday low of $2,295.31.

However, this decline was influenced by various factors, including a bullish US dollar and the growing consensus that the Federal Reserve (Fed) will maintain higher interest rates for an extended period, which were seen as key factors contributing to the downward pressure on gold prices.

Impact of Federal Reserve's Stance and Economic Data Releases on US Dollar and Gold Prices

On the US front, the broad-based US dollar continued to strengthen amid expectations that the Federal Reserve will uphold higher interest rates in response to persistent inflation. The Fed signaled a cautious stance toward reducing interest rates until they are confident about a sustained decline in inflation. This position bolstered US Treasury bond yields and the US dollar.

Despite ongoing inflation, Fed Chair Jerome Powell indicated that there wouldn't be further rate hikes, foreseeing that rates would stay elevated due to a slower disinflation process. This announcement negatively affected gold prices.

Investors will also be closely monitoring the release of the highly anticipated US Nonfarm Payrolls (NFP) report on Friday. However, the economic calendar includes critical data such as Challenger Job Cuts, Weekly Initial Jobless Claims, and Trade Balance figures, all of which could have a significant impact on market sentiment.

Impact of Easing Geopolitical Tensions and Peace Talks Optimism on Gold Prices

On the geopolitical front, the easing tensions between Iran and Israel are shifting investor focus away from safe-haven assets like gold. Meanwhile, the optimism surrounding peace talks between Israel and Hamas is boosting global risk sentiment. Nevertheless, Israel's restriction of aid missions to Gaza raises humanitarian concerns despite the geopolitical shifts.

Therefore, the easing tensions and optimism around peace talks may lead to a decrease in demand for safe-haven assets like gold, lowering gold prices despite ongoing humanitarian concerns in Gaza.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart - Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

Today, gold is trading at $2,310.99, marking a decrease of 0.38%. The precious metal's price movement appears relatively subdued as it navigates through a phase of consolidation. Given the current market conditions, several key levels and technical indicators provide insights into potential future movements.

The pivot point for today is established at $2,325, indicating a neutral point between buyers and sellers. As for resistance, gold faces its first major barrier at $2,349. If prices push beyond this, we could see further resistance at $2,370 and $2,393, challenging bulls to sustain a breakout.

Conversely, support levels are firm at $2,283, followed by additional floors at $2,265 and $2,248, which may provide a cushion if downward pressure resumes.

In terms of technical indicators, the Relative Strength Index (RSI) is at 47, suggesting a balanced market without clear signs of overextension in either direction. The 50-day Exponential Moving Average (EMA), situated at $2,323, hovers just above the current price, hinting at possible resistance on attempts to ascend.

In conclusion, while the market's direction today seems tentative, traders should consider a cautious approach. Key levels to watch include:

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