Technical Analysis

GOLD Price Analysis – May 30, 2024

By LonghornFX Technical Analysis
May 30, 20243 min

Daily Price Outlook

Gold prices have been on a downward trend, recently trading around the $2,333.44 level, hitting an intra-day low of $2,322.73. This decline is mainly due to a combination of factors, including a bullish US dollar, a hawkish Fed stance, and cautious investor sentiment ahead of key economic data releases.

However, geopolitical tensions in the Middle East offer some support to gold, highlighting its role as a safe-haven asset in times of uncertainty.

Moving ahead, Investors seem to hesitate to place any strong bids ahead of important US economic data releases, including the US GDP Annualized data for Q1 and the Core Personal Consumption Expenditures (PCE) Price Index.

Hawkish Remarks from Fed Officials Boost US Dollar and Treasury Yields

Several Federal Reserve officials have recently made hawkish comments, indicating that more interest rate hikes could be on the way. For example, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, hinted that the option of increasing rates is still on the table.

Similarly, Atlanta Fed President Raphael Bostic expressed concerns about the inflationary trend, suggesting that the path to achieving a 2% inflation rate is not yet clear.

These remarks have fueled risk aversion among investors, supporting the US dollar and US Treasury yields. Hence, the stronger US dollar and higher yields generally make gold less appealing because gold does not offer any interest or dividends.

Geopolitical Tensions in the Middle East Could Limit Gold’s Losses

Despite the downward pressure on gold prices, escalating geopolitical tensions in the Middle East could limit further losses. Gold is often considered a safe-haven asset, meaning it tends to attract investment during times of geopolitical uncertainty.

Recently, the Israeli military announced it had achieved "operational control" over the Philadelphi Corridor, a strategic strip of land along the border between Gaza and Egypt. Such developments can increase demand for gold as investors seek safety from potential instability and conflict.

Therefore, while the gold market is currently facing headwinds from a strong US dollar and high Treasury yields, ongoing geopolitical tensions might provide some support and prevent significant declines.

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

GOLD (XAU/USD) - Technical Analysis

Gold (XAU/USD) is currently trading at $2,328.880, experiencing a slight decline of 0.05%. The pivot point at $2,350.00 serves as a crucial level for determining the next market direction.

Immediate resistance is found at $2,351.74, followed by $2,380.52 and $2,392.98. On the downside, immediate support is seen at $2,307.15, with further support at $2,291.62 and $2,277.79.

Technical indicators reveal the Relative Strength Index (RSI) at 33, indicating oversold conditions. The 50-day Exponential Moving Average (EMA) is positioned at $2,370.91, suggesting potential resistance if the price attempts to rebound.

Given the current setup, the outlook for gold appears bearish below the pivot point of $2,350.00. However, if the price manages to stay above $2,325, it could signal a potential buying opportunity with a take profit target of $2,350 and a stop loss at $2,315.

This strategy aims to capitalize on potential short-term rebounds while maintaining a cautious approach.

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