GOLD Price Analysis – May 31, 2023

Daily Price Outlook

The price of Gold (XAU/USD) was unable to extend its successful run, losing some momentum around the $1,950 mark. Although it initially ascended to reach an intraday high, these gains were fleeting as it subsequently retreated back to the $1,950 level. This decrease can be linked to the rising US dollar, which found support from several factors.

In addition, the risk-on market sentiment, bolstered by optimism surrounding the agreement on the US debt ceiling, further lessened the allure of gold as a safe-haven asset. On a brighter note, amid mixed US data and disappointing activity numbers from China, gold prices may find some support. These elements might help curb significant dips in gold prices by influencing the overall market sentiment.

Looking ahead, the market is eagerly waiting for further details concerning the potential increase of the U.S. debt ceiling. If the US Republicans thwart its extension, it could trigger a market shock. In such scenarios, investors typically gravitate towards safe-haven assets like gold. Consequently, the demand for gold may escalate, and buyers are optimistic that gold prices will ascend since it is deemed a reliable gauge of market sentiment and a secure investment during periods of uncertainty.

China’s Manufacturing PMI Contracts in May, Services PMI Beats Expectations

China’s official Manufacturing Purchasing Managers’ Index (PMI) for May registered at 48.8, dropping below the preceding month and falling short of market expectations. This reflects a contraction in the manufacturing sector as the index dipped beneath the 50 threshold.

Contrastingly, the Services PMI for May exceeded the April figures and outperformed expectations. The weaker Manufacturing PMI reading may lead to heightened market uncertainty, which often bodes well for gold prices.

Market observers are eagerly anticipating the disclosure of key economic indicators in the US, encompassing the Chicago PMI and JOLTS Job Openings statistics. These pieces of data, coupled with speeches from influential members of the Federal Open Market Committee (FOMC) and shifts in US bond yields, will notably sway the demand for the US dollar. Furthermore, the overall market sentiment will play a significant part in determining the trajectory of gold prices.

GOLD Price Chart – Source: Tradingview

GOLD – Technical Outlook

The valuable commodity gold is currently exhibiting a minor upward trend after bouncing back above the pivotal support threshold of $1940, demonstrating the resilience of this level as forecasted previously.

Presently, a downward trendline may pose substantial resistance around the $1965 mark. If gold succeeds in breaching this level, it is likely to encounter the next immediate hurdle at $1971.

On the flip side, if gold dips below the $1970 mark, the next aim could be the resistance level at $1984. Examining our technical markers, the RSI and MACD indicators along with the 50-day exponential moving average imply a potential continuation of the bullish trend.

Keeping a close watch on the $1950 mark is crucial as a potential breakout could stimulate further ascent. On the decline, robust support is projected around the $1950 threshold, while the principal support level lies at $1940.