Technical Analysis

Gold Price Analysis – May 03, 2024

By LonghornFX Technical Analysis
May 3, 20243 min

Daily Price Outlook

Gold price (XAU/USD) failed to halt its downward rally and remained well offered around the $2,300 level, hitting the intraday low of $2,297.86. However, the reason for this downward rally could be associated with the risk-on market sentiment, which undermined the safe-haven demand for the precious metal.

Furthermore, the Fed's less hawkish stance and a bearish US dollar were seen as key factors that helped limit gold price's deeper losses due to their inverse relationship.

Looking forward, investors will keep their eyes on the closely watched US monthly jobs data, known as the Nonfarm Payrolls (NFP) report. They're waiting for cues about the Federal Reserve's rate-cut path before making fresh directional bets.

Impact of US Economic Data and Federal Reserve's Comments on Gold Price

On the US front, the Fed Chair Jerome Powell made cautious comments after the decision to keep interest rates steady at 5.25%-5.50%. He signaled no plans for further rate hikes, which has led to the weakening of the US Dollar (USD).

This "dovish" stance suggests the Fed is prioritizing economic growth over controlling inflation. This news, coupled with positive market sentiment, reduced demand for safe-haven assets like gold.

On the data front, US Initial Jobless Claims for the week ending April 26 remained steady at 208K, the lowest level in two months and below the expected 212K, which could give the Federal Reserve room to delay interest rate cuts.

Meanwhile, US Nonfarm Productivity in the first quarter increased by 0.3%, lower than the anticipated 0.8% and the previous quarter's 3.5% rise. This marks the slowest productivity growth since the January-March quarter in 2023. These figures suggest a stable job market but weaker productivity, which could impact the Fed's decision-making regarding monetary policy.

Therefore, the dovish stance from Fed Chair Powell, signaling no further rate hikes, coupled with positive market sentiment and stable job market data, reduced demand for safe-haven assets like gold, causing its price to decrease.

Impact of Federal Reserve's Comments on Market and Gold Price

The global market was positive on Friday, with the S&P 500 Index gaining for the second consecutive session, following Wall Street's positive movements. This was driven by the US Federal Reserve's reassurances, dismissing concerns about another interest rate hike.

Federal Reserve Chair Jerome Powell's remarks raised hopes for interest rate cuts, increasing the chances of a cut by September to 61.3%. This, along with investor optimism, is supporting the S&P 500.

Therefore, the positive market sentiment, driven by the Federal Reserve's reassurances and hopes for interest rate cuts, reduced the demand for safe-haven assets like gold, causing its price to decrease.

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

GOLD (XAU/USD) - Technical Analysis

In today's financial markets, gold prices edged higher, trading at $2305.84, which marks a 0.16% increase. The precious metal is currently trading just below its pivot point at $2318, indicating a potential zone of indecision among traders.

With the Relative Strength Index (RSI) at 46, the market sentiment appears neutral, reflecting a balance between buying and selling pressures. Moreover, the 50-Day Exponential Moving Average (EMA) stands at $2319, closely aligned with the pivot point, suggesting that any significant move above this level could signal a shift toward a bullish market stance.

Looking at the resistance and support levels, gold faces immediate resistance at $2349, with further barriers at $2370 and $2393.

Should momentum increase and these levels be breached, it could pave the way for more substantial gains. On the downside, support is found at $2283, with additional safeguards at $2265 and $2248. If prices slip below these points, it could trigger a sell-off.

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-S&P500 (SPX) Price Analysis – May 3, 2024

- Gold Price Analysis – May 02, 2024



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