Gold Price Struggles at Three-Month Low as Fed Testimony and US-China Tensions Weigh

Arslan Butt•Thursday, June 22, 2023•2 min read

The price of GOLD (XAU/USD) remains stagnant around $1,935, its lowest level in three months, as it rebounds from the $1,920 support. The market remains cautious due to mixed statements from the United States Federal Reserve (Fed) and concerning updates regarding US-China relations and China’s stimulus measures. Despite these factors, global central bank actions and a lack of major events have limited the weakness in gold prices, leaving bears hopeful.

GOLD prices fail to respond to Federal Reserve Chair Powell’s hawkish testimony. Despite Powell’s indication of potentially raising interest rates further by year-end, the lack of fresh comments and contrasting statements from other Fed officials dampened the impact on gold buyers. Federal Reserve Bank of Chicago President Austan Goolsbee’s remarks also influenced US Treasury yields and contributed to the weakness in XAU/USD.

The escalating tensions between the US and China, triggered by US President Joe Biden’s description of his Chinese counterpart as a “dictator,” have weighed on gold prices. However, China’s dismissal of criticism and the absence of downside pressure on XAU/USD indicate a mixed response from the market. Meanwhile, concerns about China’s economic slowdown and expectations of additional stimulus measures provide volatility to GOLD traders.

The focus shifts to the upcoming central bank decisions in the UK, Switzerland, Indonesia, and Mexico, as well as the second round of testimony by Fed Chair Powell before the Senate Banking Committee. These events could potentially impact gold prices and provide clearer market direction.

From a technical perspective, GOLD prices face resistance at a descending support line around $1,920. The oversold conditions of the Relative Strength Index (RSI) signal a potential corrective bounce towards the mid-$1,900s.

However, a convergence of the 200-Exponential Moving Average (EMA) and a downward-sloping trend line near $1,965 presents a significant hurdle for bullish momentum. If surpassed, attention will shift to the $1,985 resistance level. On the downside, a break below $1,920 could lead to a decline towards the $1,900 psychological level, with further weakness potentially testing the early March swing high around $1,858.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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Gold Price Struggles at Three-Month Low as Fed Testimony and US-China Tensions Weigh

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