Gold Price Soars to $2365 Amid Global Rate Cut Speculations; Market Awaits US Nonfarm Tomorrow

Gold's price has ascended to $2365 per ounce, marking a notable two-week peak in early European trading on Thursday.

Arslan Butt•Thursday, June 6, 2024•2 min read

Gold’s price has ascended to $2365 per ounce, marking a notable two-week peak in early European trading on Thursday. This increase is largely fueled by the anticipation of interest rate reductions by key global central banks, aimed at bolstering economic growth.

Gold

The Bank of Canada notably decreased its benchmark rate for the first time in four years this Wednesday, signalling worries over an economic slowdown. Similarly, the European Central Bank is poised to lower interest rates later today, a move not seen since March 2016.

Rate Cut Projections and Geopolitical Issues Propel Gold

Market dynamics have been significantly shaped by the looming possibility of a Federal Reserve rate cut, in response to emerging signs of a slowdown in the U.S. economy.

This has resulted in lower U.S. Treasury yields, diminishing support for the U.S. Dollar and bolstering the appeal of non-yielding assets like gold. Additionally, persistent geopolitical tensions in the Middle East have reinforced gold’s status as a safe-haven asset.

However, the potential for further price gains remains moderated as market participants await this Friday’s U.S. Nonfarm Payrolls report.

Economic Data Underpins Fed Rate Cut Expectations

Recent economic data releases have further supported the case for imminent Federal Reserve rate cuts, which would apply downward pressure on U.S. Treasury bond yields and benefit gold.

The ADP Non-Farm Employment Change for May indicated a job gain of 152K, below the expected 173K, suggesting a softening labour market. Concurrently, the ISM Services PMI for May climbed to 53.8, exceeding expectations and signalling an alleviation in inflationary pressures.

Meanwhile, the U.S. 10-year Treasury yield has dipped to a two-month low, fueling speculation about disappointing forthcoming job data. This backdrop keeps investors’ focus sharply on U.S. labor market updates, including this week’s Unemployment Claims and the pivotal Nonfarm Payrolls data.

Gold Price Forecast: Technical Outlook

Gold prices have edged higher to $2368.38, reflecting a 0.56% increase on a four-hour chart timeframe. The current pivot point is set at $2379.00, serving as a crucial indicator for directional movement. Immediate resistance is seen at $2394.72, with further upside targets at $2411.10.

A notable resistance point also appears at $2346.24, slightly below the current trading range. Support levels are clearly defined at $2332.48 and $2315.77, with additional levels to be monitored if a downward trend intensifies.

The Relative Strength Index (RSI) stands at 65, indicating a strong upward momentum. The 50-day Exponential Moving Average (EMA) at $2346.68 supports a bullish outlook.In conclusion, the market exhibits bullish tendencies above $2364.

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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.