GOLD Price Analysis – May 24, 2023

Daily Price Outlook

During the early European session on Wednesday, the gold price failed to capitalize on its slight intraday increase and faced selling pressure around the $1,980 level. The rebound seen overnight from the monthly low recorded last week seems to have stalled, with the XAU/USD now retracing closer to the $1,970 level.

Expectations of a more hawkish stance from the Federal Reserve (Fed) following recent comments by various Fed officials have hindered the gains for gold. The market is now pricing in a 30% probability of a 25 basis points (bps) rate hike in June, which acts as a headwind for the non-yielding precious metal.

The release of the Federal Open Market Committee (FOMC) meeting minutes later in the US session will continue to be a focal point for the market, as investors seek clues about the timing of the next rate hike and its impact on short-term USD dynamics and the XAU/USD price.

Concerns about a global economic slowdown and the unresolved negotiations to raise the US debt ceiling provide some support for safe-haven gold.

The recent talks between President Joe Biden’s administration and congressional Republicans on the debt ceiling ended without an agreement to increase the borrowing cap for the federal government, raising worries about potential debt defaults and dampening investor confidence.

Additionally, the possibility of an impending recession may deter bearish bets on XAU/USD.

The USD’s strength continues to act as a headwind for the gold price, with the USD Index (DXY) maintaining its elevated position near the two-month high reached on Tuesday.

Growing expectations of the Fed maintaining higher interest rates for a longer period reinforce the overall bullish outlook for the USD. This may weigh on the demand for gold priced in USD ahead of the crucial FOMC meeting minutes release.

The ongoing US debt ceiling talks and US bond yields will also influence USD demand and impact gold trading. Furthermore, overall market sentiment will play a role in creating short-term trading opportunities for XAU/USD.

GOLD Price Chart – Source: Tradingview

GOLD – Technical Outlook

Gold experienced various fluctuations on Wednesday, trading around the $1,972 level. The recent breach of the 23.6% Fibonacci retracement level at $1,968 suggests it may serve as a support level for Gold.

Key technical indicators, such as the 50-day exponential moving average, RSI, and MACD, support a bullish trend, indicating a high probability of continued upward movement.

Resistance is observed around the $1,980 level on the upside, and a breakthrough above this level could drive prices towards $1,984. Additionally, surpassing the $1,984 level may lead Gold to target the 61.8% Fibonacci retracement level at $1,985.