Technical Analysis

GOLD Price Analysis – May 28, 2024

By LonghornFX Technical Analysis
May 28, 20244 min

Daily Price Outlook

Gold prices (XAU/USD) failed to prolong their upward trend and turned bearish around the 2,345 level, hitting an intra-day low of 2,340. The reason for this downward trend can be attributed to the regained strength of the US dollar, which gained traction on the back of hawkish Fed minutes and stronger US economic data.

This boosted the US dollar and contributed to the losses in gold prices. Furthermore, the risk-on market sentiment, triggered by the upbeat US economic data and the recovering US economy, was seen as another key factor that kept gold prices under pressure.

Moving ahead, traders are keeping their eyes on the US Conference Board’s Consumer Confidence report on Tuesday, along with speeches from Fed officials Neel Kashkari, Mary Daly, and Lisa Cook.

On Friday, the focus will be on the US Core PCE Price Index. Hawkish Fed comments and signs of persistent inflation could boost the USD and pressure gold prices.

Israeli Airstrike in Gaza Sparks International Outcry and Gold Price Surge

On the geopolitical front, an Israeli airstrike caused a fire that killed 45 people in a tent camp in Rafah, a city in Gaza. Global leaders are urging Israel to stop its attacks, following an order from the World Court, according to Reuters.

This incident has increased international pressure on Israel to cease military actions in Gaza. The situation has drawn widespread condemnation and calls for a ceasefire to prevent further civilian casualties.

This geopolitical tension could drive up gold prices as investors seek safe-haven assets amid increased uncertainty and international pressure on Israel to cease its military actions in Gaza.

Fed Meeting Minutes and Economic Data Impact Gold Price and USD Strength

On the US front, recent Fed meeting minutes indicate it will take longer than expected to reach the 2% inflation target. Traders have reduced their bets on a September interest rate cut by the Fed to 49%, down from 63% last week, according to the CME FedWatch tool. Moving on, the preliminary US GDP growth for Q1 is estimated at 1.4%, down from 1.6%.

The US Core PCE Price Index, the Fed’s preferred inflation measure, is expected to rise 0.3% MoM and 2.8% YoY in April. Furthermore, the UBS analysts project gold will reach $2,600 by the end of 2024, while Citi experts forecast $3,000 within six to eighteen months.

Therefore, the gold price may decline as reduced expectations of a September Fed rate cut and stronger US economic indicators bolster the dollar, offsetting bullish forecasts by UBS and Citi analysts.

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

GOLD (XAU/USD) - Technical Analysis

Gold (XAU/USD) is trading at $2,343.770, reflecting a marginal decline of 0.01% on the 4-hour chart. The pivot point at $2,351.57 is crucial for determining market direction. Immediate resistance levels are $2,367.51, $2,380.52, and $2,392.98. On the downside, immediate support is found at $2,326.60, followed by $2,307.23 and $2,291.85.

The Relative Strength Index (RSI) is at 39, indicating potential bearish momentum. The 50-day Exponential Moving Average (EMA) stands at $2,381.81, suggesting the current price is below a significant resistance level.

The outlook for gold remains bearish below the pivot point of $2,351.57. Traders are advised to consider selling below $2,350, with a take profit target of $2,330 and a stop loss at $2,365. The combination of resistance levels and technical indicators suggests limited upside potential unless the price breaks above the immediate resistance levels.

The technical landscape suggests that gold is under pressure with limited upward momentum unless key resistance levels are breached.

The RSI at 39 supports a bearish outlook, while the position below the 50-day EMA at $2,381.81 adds to the bearish sentiment. Investors should monitor these key levels closely for potential shifts in market dynamics.

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