Gold Price Falls to $2,314 Amid Bearish Sentiment and Key Support Levels

Gold (XAU/USD) experienced fresh supply during Thursday’s Asian session, halting a three-day winning streak and retreating from its weekly peak of around $2,341-$2,342.

This pullback follows the Federal Reserve’s (Fed) unexpected hawkish stance on Wednesday, overshadowing the softer US consumer inflation data.

The Fed now anticipates only one rate cut in 2024, down from three projected in March, driving investors away from non-yielding assets like gold.

Fed’s Hawkish Surprise Impact

The shift in the Fed’s projections has pushed US Treasury bond yields higher, bolstering the US Dollar.

This development further pressures the US Dollar-denominated gold price. Despite this, geopolitical tensions in the Middle East and renewed political uncertainty in Europe may prevent deeper losses in gold.

US Economic Data Ahead

Traders are now focusing on Thursday’s US economic releases, including the Producer Price Index (PPI) and Weekly Initial Jobless Claims data, for potential short-term trading opportunities.

The Fed’s latest policy decision has already impacted market sentiment, with the Bureau of Labor Statistics (BLS) reporting no change in the Consumer Price Index (CPI) for May, the first such occurrence since June last year.

The annual CPI rate slightly declined to 3.3% from 3.4%, while the core CPI rose 0.2% for the month and 3.4% annually, below the 3.5% consensus forecast.

Fed’s Forecasts and Global Political Uncertainty

The Fed’s decision to keep interest rates unchanged at its two-day policy meeting, along with the revised forecast of the benchmark rate dropping to 5.1% this year, suggests just one rate cut in 2024. This contrasts sharply with the three cuts anticipated in March.

The Fed also raised its neutral rate forecast to 2.8% from 2.6%, providing some support to the US Dollar and further pressuring gold prices.

Political uncertainty in the Eurozone, especially with French President Emmanuel Macron’s call for snap elections, could lend some support to safe-haven assets like gold.

Additionally, Thursday’s US macroeconomic data might offer short-term trading opportunities ahead of the Bank of Japan’s (BoJ) policy decision on Friday, potentially adding to market volatility.

In conclusion, while the Fed’s hawkish outlook weighs on Gold (XAU/USD), geopolitical factors and upcoming economic data could create opportunities for traders. The current price forecast for gold remains cautious, with market participants closely monitoring these developments.

Gold Price Forecast – Technical Outlook

Gold (XAU/USD) is currently trading at $2,314.165, down 0.51%. The 4-hour chart indicates the key pivot point at $2,325.10. Immediate resistance levels are $2,336.79, $2,348.12, and $2,365.66. On the downside, immediate support levels are $2,287.82, $2,271.74, and $2,254.20.

Technical indicators reveal that the Relative Strength Index (RSI) is at 45, suggesting neutral momentum. The 50-day Exponential Moving Average (EMA) stands at $2,329.23, indicating a bearish trend.

In conclusion, gold is exhibiting a bearish outlook below $2,325. A break above this level could signal a shift towards a bullish bias, while remaining below it reinforces the bearish sentiment.

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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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