GOLD Price Analysis – May 29, 2023

Daily Price Outlook

Gold price (XAU/USD) retreats from its intraday high of $1,941 as it fails to react positively to the initial agreement reached by US policymakers to avert a potential default. The Federal Reserve’s hawkish stance and uncertainty surrounding the passage of the agreement through Congress are factors influencing the decision of XAU/USD.

Despite the recent deal on extending the US debt limit, market concerns about a potential default persist, and some policymakers’ approval of the deal may be the reason behind this sentiment. However, the agreement faces opposition from both radical left and right factions due to the compromises made by each party.

To prevent a catastrophic default, the debt ceiling agreement needs to pass the House on Wednesday and the Senate by June 5. US Vice President Joe Biden has strongly urged both chambers to approve the agreement.

Given the significance of the US debt ceiling deal and the proximity of key short-term technical support, caution is advised for gold sellers ahead of the release of the US nonfarm payroll data.

Positive US economic data and expectations of a hawkish Federal Reserve stance also contribute to gold selling pressure. Upbeat readings in US PMIs, Q1 2023 GDP second estimate, durable goods orders, and the Core PCE Price Index indicate strength in the economy. Notably, US durable goods orders for April surpassed expectations, showing an increase of 1.1% compared to the predicted -1.0%.

Moreover, core durable goods orders, excluding aircraft, rose by 1.4% against the expected -0.2%. The Core PCE Price Index for the same month exceeded market expectations, reaching 0.4% MoM and 4.7% YoY.

GOLD Price Chart – Source: Tradingview

GOLD – Technical Outlook

Gold, the valuable metal, is currently exhibiting a slightly bullish sentiment following a significant level of support of around $1,940. Its current trading position is around $1,948, accompanied by a bullish candlestick pattern that suggests a dominant presence of buyers in the market.

On the four-hour timeframe, Gold has successfully surpassed the 50-day exponential moving average (EMA), which previously acted as resistance at $1,945.

If Gold manages to sustain candlestick closures above the 50-day EMA, it may present an opportunity for long positions, with the next resistance levels targeted at $1,960 or $1,965. The robust support at $1,940, if maintained, will be crucial, and any breach could lead to the next support level of around $1,927.11.

Alternatively, if Gold surpasses the $1,965 level, the next potential target lies at $1,975 or $1,984.