GOLD Price Analysis – May 13, 2024
Daily Price Outlook
Gold price (XAU/USD) is unable to gain positive traction and remains under pressure around the 2,343.70 level, hitting an intraday low of 2,339.15. However, the declining rally in the gold price started after hawkish remarks from the Federal Reserve (Fed) and growing speculation that the Fed might delay its easing plans, boosting the US dollar. The US dollar has been gaining momentum mainly due to the hawkish remarks from the Federal Reserve.
Moving on, traders seem cautious to place any strong bids ahead of the Fed’s Jefferson and Mester speeches on Monday. Meanwhile, the US Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Sales will be in the spotlight. In case of stronger-than-expected economic data, this might dampen hopes for a Fed rate cut and exert some selling pressure on XAU/USD.
Impact of Federal Reserve Policy on Gold
On the US front, the Federal Reserve's hawkish stance and talk of delaying plans to aid the economy have given a boost to the US dollar and pushed down gold prices. San Francisco Fed President Daly said, "We might need to keep policies tight for a while to reach our inflation goals." Meanwhile, Atlanta Fed President Bostic hinted at possible interest rate cuts this year despite uncertainties. Dallas Fed President Logan warned about the risks of inflation, saying it's too early to lower rates. Minneapolis Fed President Kashkari is taking a "wait-and-see" approach, saying we'd really need a good reason to raise rates to tackle inflation.
On the data front, the University of Michigan Consumer Sentiment Index fell to 67.4 in May from April's 77.2, hitting a six-month low and missing market forecasts of 76. At the same time, the UoM 5-year Consumer Inflation Expectation climbed to 3.1%, a six-month peak, up from the previous 3.0%.
Therefore, the Federal Reserve's hawkish stance and mixed signals from Fed officials have strengthened the US dollar and dampened silver prices. Meanwhile, the weak consumer sentiment and rising inflation expectations could further pressure gold prices.
Geopolitical Tensions in Middle East Boost Gold Prices
On the geopolitical front, ongoing tensions in the Middle East are likely to help precious metals in the near term. The Israeli recent military's operations in northern Gaza and reports of an impending full-scale invasion, along with fierce clashes and mass evacuations, have heightened regional instability. Further, Egypt's decision to join a lawsuit against Israel at the International Court of Justice further escalates tensions.
Therefore, the escalating tensions in the Middle East, with Israeli military operations and geopolitical uncertainties, could bolster demand for safe-haven assets like gold, lifting its price in the short term.
GOLD (XAU/USD) - Technical Analysis
Today's trading session saw Gold (XAU/USD) experiencing a slight decline, with the price settling at $2354.815, marking a decrease of 0.32%. This movement occurs amidst a broader context where the precious metal struggles to sustain its bullish momentum amid fluctuating market conditions.
The critical pivot point for today stands at $2363.88, serving as the immediate resistance level. Should gold surpass this threshold, it would encounter further resistance at $2379.14 and $2393.38, respectively.
On the flip side, immediate support is observed at $2343.76, followed by stronger support levels at $2327.06 and $2306.33. These markers will be crucial if gold continues its downward trend.
The Relative Strength Index (RSI) is currently at 60, suggesting that while there is some buying momentum, the market is not yet in overbought territory. The 50-day Exponential Moving Average (EMA) is at $2319.05, which gold is trading above, indicating some resilience in its current trading range.
Given the technical setup, the recommendation for traders is to consider a selling strategy if gold falls below $2364, targeting a take profit point at $2343, with a stop loss set at $2378. This approach is based on the anticipation that breaking below the pivot could intensify selling pressure, pushing gold towards lower support levels.
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