Daily Price Outlook
The price of gold (XAU/USD) has trimmed its weekly losses to the lowest levels in two months as investors await crucial US data and the resolution of the debt ceiling issue.
The recent bounce in the precious metal could be attributed to the US dollar pulling back from its multi-day high, as reports suggest that policymakers are still working to avoid a US default.
However, revised US real GDP and activity data support expectations of a hawkish stance from the Federal Reserve, despite mixed statements from officials recently, which are exerting downward pressure on XAU/USD.
Moving forward, the outcome of the US debt ceiling negotiations will be crucial in determining market movements as the early June deadline approaches.
Additionally, the April US Durable Goods Orders and the Core Personal Consumption Expenditure (PCE) Price Index, which is a favored inflation gauge of the Fed, will be closely watched for clearer direction.
The upcoming US durable goods orders report on Friday will be closely monitored. The April Durable Goods Orders data is expected to show a decline of 1.0%, contrasting with the previous increase of 3.2%. Any decrease in durable goods orders would significantly impact the core Consumer Price Index (CPI), which has exhibited notable resilience.
GOLD – Technical Outlook
Gold witnessed a decline on Friday, with support found near the $1,936 level. Upon analyzing the 4-hour timeframe, it appears that gold might experience a bullish trend due to the formation of a doji candlestick pattern. Furthermore, the presence of an engulfing candlestick pattern suggests a weakening bearish sentiment and a potential shift towards a bullish sentiment.
The immediate resistance level for gold is anticipated to be around $1,955. If there is a surge in demand for precious metals, gold could surpass the $1,955 level and aim for the next resistance at $1,965. Conversely, support for gold is identified near the $1,935 level, and a breach below this level may lead to further decline towards $1,919.
It is crucial to monitor the US economy’s core durable goods orders and UoM consumer sentiment as they can influence the price movement of gold and the US dollar.