Gold Technical Outlook – Can $1,850 Drive Uptrend?
Gold spot rises during the New York session but fails to challenge the weekly highs and remains anchored near the 20-day moving average
Gold spot rises during the New York session but fails to challenge the weekly highs and remains anchored near the 20-day moving average (DMA) at $1848.48. XAU/USD is currently trading at $1852.28 per troy ounce. The reading for US Core PCE was in line with expectations but lower than the reading for March. In an upbeat market mood, European and US equities continued to rise.
The US Commerce Department published the Core Personal Consumption Expenditure (PCE), the Federal Reserve’s preferred inflation indicator. Numbers came in better than expected, indicating that prices remain elevated, rising 4.9 percent in May (annualized), but falling short of the 5.1 percent rate recorded in April.
Will the Fed tighten conditions more slowly now that inflation appears to be easing from four-decade highs? Meanwhile, according to the Fed’s May minutes, all members agreed to raise rates by 50 basis points in each of the two consecutive monetary policy meetings.
Meanwhile, the US Dollar Index, which measures the value of the US dollar to its peers, has recovered some of its early-day losses and is up 0.07 percent at 101.827. Failure to reclaim above 102.500 would allow a retest of the April 24 low of 99.818.
In contrast to the USD’s gains, US Treasury yields indicated that investors retreated from overpricing US central bank rate hike expectations. The US 10-year Treasury yield is nearly flat for the day, down at 2.743 percent, a positive for the non-yielding metal, which benefits from lower yields.
In other news, the US economic docket revealed new information. Consumer spending increased by 0.9 percent last month, exceeding expectations, as consumers increased purchases of goods and services, a sign that could support US economic growth in the second quarter amid growing concerns about a recession.
Gold Technical Outlook
The gold XAU/USD price faced negative pressure in the previous sessions, testing the key support of 1850.00. However, the price is now consolidating beyond this support, as the EMA50 protects the recently suggested positive scenario, and stochastic begins to provide positive overlapping signals.
As a result of these factors, we recommend a bullish bias in the coming sessions, with a target of 1890.00 as the next main station. However, a break of 1850.00 followed by 1838.10 will halt the expected rise and force the price to fall.
Today’s trading range is expected to be between 1835 support and 1880 resistance. Good luck!
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