GOLD Price Analysis – May 15, 2024
Daily Price Outlook
Gold price (XAU/USD) continued its upward momentum and remained well bid around the $2,362 level, reaching an intraday high of $2,363. The reason for its bullish trend can be attributed to strong global demand for the precious metal. According to the World Gold Council's Q1 2024 report, global gold demand rose by 3% to 1,238 tones, making it the strongest first quarter since 2016. This increase in demand further fueled the upward trend of gold. Meanwhile, increasing tension in the Middle East was seen as one of the factors supporting gold's upward trend.
In contrast to this, Federal Reserve (Fed) officials' hawkish remarks and previously released upbeat US Producer Price Index (PPI) boosted the US dollar and capped further gains in the gold price. However, the rise in the Producer Price Index (PPI) and Core PPI suggests increasing inflationary pressures, which lead to expectations of tighter monetary policy by the Federal Reserve.
Impact of Stronger US Dollar & Hawkish Stance on Gold Prices
Despite the risk-on market sentiment, the US dollar has been showing bullish bias, mainly backed by the Federal Reserve's hawkish stance and recent positive economic indicators. On the data front, the Producer Price Index (PPI) surged 2.2% year-over-year in April, indicating mounting inflationary pressures, with the Core PPI rising by 2.4%.
As in result, Fed Chair Jerome Powell is saying that inflation is sticking around for longer than they thought, so they might need to keep interest rates higher for a longer time. On the other hand, Kansas City Fed President Jeffrey Schmid is warning that inflation is still high, suggesting the central bank might need to do more to manage it.
Looking ahead, it is expected that the annual Consumer Price Index (CPI) inflation will ease slightly in April, with the headline CPI anticipated to decrease to 3.4% and the Core CPI to 3.6%. Additionally, US Retail Sales are projected to decline in April. Financial markets are currently factoring in the probability of a Fed rate cut in September 2024.
Despite the stronger US dollar and the Fed's hawkish stance, gold prices are gaining momentum due to heightened demand for the precious metal as a safe-haven asset amidst mounting inflationary pressures and geopolitical tensions.
Escalating Gaza Conflict Sparks Global Market Uncertainty, Surge in Safe-Haven Gold Prices
On the geopolitical front, the ongoing conflict between Israeli forces and Palestinian armed groups in Gaza shows no signs of slowing down, resulting in a high number of casualties, including civilians. It should also be noted that Israeli airstrikes have caused extensive destruction and forced hundreds of thousands of Palestinians to leave their homes. Consequently, the ongoing conflict in Gaza contributes to uncertainty in global markets, prompting investors to seek safe-haven assets like Gold.
GOLD (XAU/USD) - Technical Analysis
Gold is currently trading at $2,357.26, down 0.03% for the day. On the 4-hour chart, key price levels suggest potential movements. The pivot point, marked by the green line, is at $2,362.57, a critical level for traders to watch.
Immediate resistance is located at $2,378.22, followed by $2,389.35 and $2,403.83. If gold breaks through these resistance levels, it could signal further bullish momentum. Conversely, immediate support is found at $2,352.71, with additional support levels at $2,346.77 and $2,337.10. Should gold fall below these levels, it may indicate a bearish trend.
Technical indicators provide further insights. The Relative Strength Index (RSI) stands at 60, suggesting that gold is in a slightly bullish territory but not yet overbought. The 50-day Exponential Moving Average (EMA) is at $2,347.60, closely aligning with the current price, indicating that recent price movements are in line with the medium-term trend.
The overall technical outlook for gold remains cautiously bullish above the pivot point of $2,362.57. A break above this level could prompt further buying interest, targeting the immediate resistance levels. However, if gold fails to hold above the pivot point, it may test the immediate support levels, potentially leading to increased selling pressure.
Conclusion: The recommended entry price for a buy limit is $2,352, with a take profit target at $2,370 and a stop loss at $2,345.
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