Gold Price Stuck Between MAs on Central Bank Uncertainty

Gold continues to make lower highs however the Gold price is still holding around $2,300. We have seen several dips in XAU below this round level, but Gold buyers keep coming back, pushing the price above $2,300, however, buyers have been unable to push to a new record high, so at the moment there is a war between buyers and sellers in Gold.

Gold has been finding support at the 200 SMA

XAU/USD prices have lately fallen substantially due to declining prospects of US rate reduction despite inflation dropping, as the employment market remains sluggish, notwithstanding last Friday’s May NFP jobs statistics. The FED rate cut prospects have been decreased to only one in 2024, while the ECB has not committed to any more rate cuts at this time.

Gold Chart H4 – The 200 SMA Continues to HoldChart XAUUSD, H4, 2024.06.13 20:46 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

Investors were anticipating central banks to go on a price cut frenzy comparable to the rate increase mania experienced in the previous two years, but the ECB and FED appear hesitant. This situation has driven the dollar to a one-month high, putting pressure on GOLD prices.

Gold prices experienced a volatile week, initially rising on Fed rate cut expectations post-weak CPI data, but facing strong technical resistance at the 100-day SMA and a hawkish Fed stance. The decline below $2,300 per ounce underscores the impact of these factors. Moving forward, while technical signals suggest potential for further declines, geopolitical tensions and global economic uncertainties could influence price movements. Traders and investors should monitor key support levels and market developments closely for further insights into gold’s near-term direction.

Gold Price Forecast:

Recent Gold Movements:

  • Spot Gold Prices: Recently rose above $2,341.50 per ounce due to expectations of future Fed rate cuts following a disappointing US CPI inflation report for May.
  • Technical Resistance: The advance was halted around the 100-day Simple Moving Average (SMA) (green line) where a morning star pattern formed, signaling a potential bearish reversal.
  • Fed Decision: The Federal Reserve maintained interest rates at 5.50% during its recent meeting, surprising markets with a hawkish stance and no signals of imminent rate cuts. This led to a strengthening of the USD and a decline in gold prices, pushing XAU/USD below $2,300 per ounce.

Gold Market Outlook:

  • Bearish Reversal: Despite rising initially above $2,340 on Wednesday, gold faced resistance at the 100-day SMA and subsequently retreated.
  • Technical Indicators: Technical signals are turning bearish, suggesting a potential further decline. The 100 SMA is descending, with the 200 SMA providing initial support around $2,290, followed by the monthly low near $2,286.70.
  • Geopolitical Factors: Despite recent declines, geopolitical tensions in the Middle East and political uncertainties in Europe may provide some support to gold prices, limiting further losses.

Short-term XAU Perspective:

  • Chart Analysis: On the 4-hour chart, the technical outlook favors further downside movements based on the declining 100 SMA and other bearish signals.
  • Support Levels: Key support levels to watch include the 200 SMA around $2,290 and the monthly low around $2,285-86. These levels could act as potential buying zones or areas where the downward momentum might pause.

Gold Live Chart

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Skerdian Meta
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Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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