A holiday in the US keeps major pairs within familiar levels ahead of Thursday’s close.
The United States will release the June Nonfarm Payrolls report on Friday.
XAU/USD consolidates weekly gains and has room to extend its advance.
Gold showed no signs of life on Thursday, trading just below the $2,360 mark. A holiday in the United States (US) exacerbated the quietness in the second half of the day, leaving the bright metal consolidating weekly gains.
The US Dollar turned south after Federal Reserve (Fed) Chairman Jerome Powell cooled down his words on inflation. Despite maintaining a cautious tone, Powell said that the disinflationary trend seems to be resuming in an event organized by the European Central Bank (ECB) in Sintra. His words put pressure on the Greenback ahead of key US employment-related data.
The Bureau of Labor Statistics (BLS) will release the Nonfarm Payrolls (NFP) report on Friday, and market participants expect the US economy to have added 190K new positions in June, below the 272K gained in May. The Unemployment Rate is expected to remain steady at 4%, while Average Hourly Earnings are foreseen to be up 3.9% YoY, easing from the previous 4.1%. The figures, if confirmed, may fuel speculation of a September rate cut and push the US Dollar further south across the FX board.
XAU/USD short-term technical outlook
Technically, the daily chart shows XAU/USD has remained confined to a tight range near its weekly high of $2,364.83, losing momentum but with the risk still skewed to the upside. The pair is developing above a flat 20 Simple Moving Average (SMA) while the 100 and 200 SMAs keep advancing below it. Technical indicators, in the meantime, remain within positive levels, although without directional strength.
In the near term, and according to the 4-hour chart, chances are of another leg north. XAU/USD develops above all its moving averages, with the 20 SMA maintaining an upward slope after crossing above the 100 and 200 SMAs. Finally, technical indicators have turned flat but hold near overbought readings without signs of upward exhaustion.
Certainly, an argument can be made that the selling is overdone and that a bounce is overdue. However, as it looks now, the week may end with a fourth consecutive weekly wide range red candle with a close near the low of the week’s trading range. This shows sellers dominating to the end of the session and therefore they may continue to do so heading into next week.
There is still time for that to change, but not much, especially given the lower activity levels due to the Independence Day holiday in the United States. If this scenario is correct, then the price of natural gas remains at risk of testing the next lower target zone before a notable bounce.
Possible Support Zone Reached
Nonetheless, the retracement low of 2.335 completed a falling ABCD pattern and is shown on the chart. Once price symmetry between the AB and CD legs of the pattern match, or are close to each other, a potential pivot level has been identified. That could lead to a reversal as either support or resistance shows up, depending on the direction of the pattern. Or a breakout through the price area and a continuation of the trend triggers instead.
For natural gas, the current retracement low completed the initial target for the ABCD pattern. Also, a 50% trend retracement was completed during the decline at 2.37. Together, the two price levels can be watched as a support zone. So far, that is the case but there is little indication that the support zone can do more than slow the descent. Natural gas fell below the 200-Day MA two days ago and it continues to fall. This is bearish behavior.
Lower Support Looks Like 2.23
A decisive drop below 2.335 could lead to a decline to the next lower potential support zone from around 2.23 to 2.18. The 61.8% Fibonacci retracement is at 2.18, while an extended lower target for the ABCD pattern completes at 2.20. A prior swing ow at 2.23 begins the support zone.
For a look at all of today’s economic events, check out our economic calendar.
A holiday in the US keeps major pairs within familiar levels ahead of Thursday’s close.
The United States will release the June Nonfarm Payrolls report on Friday.
XAU/USD consolidates weekly gains and has room to extend its advance.
Gold showed no signs of life on Thursday, trading just below the $2,360 mark. A holiday in the United States (US) exacerbated the quietness in the second half of the day, leaving the bright metal consolidating weekly gains.
The US Dollar turned south after Federal Reserve (Fed) Chairman Jerome Powell cooled down his words on inflation. Despite maintaining a cautious tone, Powell said that the disinflationary trend seems to be resuming in an event organized by the European Central Bank (ECB) in Sintra. His words put pressure on the Greenback ahead of key US employment-related data.
The Bureau of Labor Statistics (BLS) will release the Nonfarm Payrolls (NFP) report on Friday, and market participants expect the US economy to have added 190K new positions in June, below the 272K gained in May. The Unemployment Rate is expected to remain steady at 4%, while Average Hourly Earnings are foreseen to be up 3.9% YoY, easing from the previous 4.1%. The figures, if confirmed, may fuel speculation of a September rate cut and push the US Dollar further south across the FX board.
XAU/USD short-term technical outlook
Technically, the daily chart shows XAU/USD has remained confined to a tight range near its weekly high of $2,364.83, losing momentum but with the risk still skewed to the upside. The pair is developing above a flat 20 Simple Moving Average (SMA) while the 100 and 200 SMAs keep advancing below it. Technical indicators, in the meantime, remain within positive levels, although without directional strength.
In the near term, and according to the 4-hour chart, chances are of another leg north. XAU/USD develops above all its moving averages, with the 20 SMA maintaining an upward slope after crossing above the 100 and 200 SMAs. Finally, technical indicators have turned flat but hold near overbought readings without signs of upward exhaustion.
Support levels: 2,341.50 2,329.20 2,313.60
Resistance levels: 2,368.60, 2,387.60 2,400.00
XAU/USD Current price: $2,357.74
A holiday in the US keeps major pairs within familiar levels ahead of Thursday’s close.
The United States will release the June Nonfarm Payrolls report on Friday.
XAU/USD consolidates weekly gains and has room to extend its advance.
Gold showed no signs of life on Thursday, trading just below the $2,360 mark. A holiday in the United States (US) exacerbated the quietness in the second half of the day, leaving the bright metal consolidating weekly gains.
The US Dollar turned south after Federal Reserve (Fed) Chairman Jerome Powell cooled down his words on inflation. Despite maintaining a cautious tone, Powell said that the disinflationary trend seems to be resuming in an event organized by the European Central Bank (ECB) in Sintra. His words put pressure on the Greenback ahead of key US employment-related data.
The Bureau of Labor Statistics (BLS) will release the Nonfarm Payrolls (NFP) report on Friday, and market participants expect the US economy to have added 190K new positions in June, below the 272K gained in May. The Unemployment Rate is expected to remain steady at 4%, while Average Hourly Earnings are foreseen to be up 3.9% YoY, easing from the previous 4.1%. The figures, if confirmed, may fuel speculation of a September rate cut and push the US Dollar further south across the FX board.
XAU/USD short-term technical outlook
Technically, the daily chart shows XAU/USD has remained confined to a tight range near its weekly high of $2,364.83, losing momentum but with the risk still skewed to the upside. The pair is developing above a flat 20 Simple Moving Average (SMA) while the 100 and 200 SMAs keep advancing below it. Technical indicators, in the meantime, remain within positive levels, although without directional strength.
In the near term, and according to the 4-hour chart, chances are of another leg north. XAU/USD develops above all its moving averages, with the 20 SMA maintaining an upward slope after crossing above the 100 and 200 SMAs. Finally, technical indicators have turned flat but hold near overbought readings without signs of upward exhaustion.
The natural gas market has fallen again during, I would say thin holiday trading on Thursday as the Americans were away for Independence Day. That being said, we are now below the support and we have formed a large M pattern. At this point, we could send the market down to the $2 level, so be cognizant of this. I’m a buyer of this, but not here. Let it fall. Typically speaking, late in the summer, we start to pick up momentum again due to the autumn coming. $2, of course, is a large round psychologically significant figure. And as you know, I’ve been long of this market for some time.
I went ahead and pulled the ripcord today, so now I’m flat. I made some money on the ETF. Didn’t make anywhere near as much as I could, but I wanted to give it as much room as I could. At this point, the closer we get to $2, the more likely I will be to start building up an ETF position again, but ETF because it doesn’t have leverage. That way I can hang on to this for a while. I don’t care what happens day to day. It’s very stress-free.
In a downtrend, previous price areas of support can be areas of resistance on the way down, before the dominant downtrend resumes. That happened today relative to the 200-Day line. Also, similar price behavior occurred on Wednesday as well. A daily close below yesterday’s low of 2.415 will confirm a continuation of the falling trend and will put lower price targets on the horizon.
Two Lower Price Zones Starting with 2.24
There are two lower target zones identified on the chart by the confluence of price levels derived from Fibonacci analysis and previous price structure showing support or resistance. Previous swing highs and lows present the more obvious price levels to watch. The first is from around 2.37 to 2.34, and the second shows up from around 2.24 to 2.18. Given the signs of sustained downward momentum, it is looking like the first price zone will likely be reached before the current retracement finds support that stops the decline and leads to at least a bounce.
Bearish Weekly Pattern
Also, keep an eye on the weekly chart heading into the end of the week. This week is the third week down with lower weekly highs and lower weekly lows. Natural gas is currently on track to close near the lows of the week’s range, which would indicate that sellers remain in charge going into the weekend. Each of the prior three weeks ended in the red and near the lows of the week. They reflect clear and distinct selling. Since there is no sign yet that the retracement may be close to complete, the next lower target zone becomes likely to be reached at a minimum.
For a look at all of today’s economic events, check out our economic calendar.
A batch of United States tepid data boosted the mood and put the US Dollar under selling pressure.
Wall Street recovered its poise despite softer-than-expected US employment and growth figures.
XAU/USD turned bullish in the near term and may run past the June high at $2,368.59.
A sharp US Dollar decline pushed XAU/USD above the $2,360 mark for the first time in over two weeks. A rough of tepid United States (US) data pushed the US Dollar down, although the major catalyst was the ISM Services PMI, which unexpectedly dropped to 48.8 in June after posting 53.8 in May, also missing the expected 52.5.
The country also reported that Challenger Job Cuts showed US-based employers announced 48,786 cuts in June, down 23.6% from the 63,816 cuts announced in May. Furthermore, the May Goods and Services Trade Balance posted a deficit of $75.1 billion, better than anticipated, while Initial Jobless Claims for the week ended June 28 surged to 238K, worse than the 235K anticipated by market players. Finally, the ADP report on private job creation showed that the sector added 150K new positions in June, below the revised 157K from May and missing the 160K expected.
Wall Street also gained impetus as a result of the better market mood. Only the Dow Jones Industrial Average trades in the red, down 0.12%. The S&P500 and the Nasdaq Composite, however, trade in the green, while government bond yields are down, further weighing on the Greenback.
XAU/USD short-term technical outlook
From a technical point of view, the daily chat for the XAU/USD pair shows the bright metal met buyers around a flat 20 Simple Moving Average (SMA), currently at around $2,330, while the 100 and 200 SMAs keep heading north far below the shorter one. Technical indicators, in the meantime, picked up momentum within positive levels, in line with another leg north. A relevant resistance level can be found at $2,368.59, the June monthly high.
In the near term, and according to the 4-hour chart, the risk also skews to the upside. XAU/USD trades above all its moving averages, although the 20 SMA advances between directionless, longer ones. Technical indicators, in the meantime, flirt with overbought readings without signs of upward exhaustion.
Support levels: 2,341.50 2,329.20 2,313.60
Resistance levels: 2,368.60, 2,387.60 2,400.00
XAU/USD Current price: $2,359.66
A batch of United States tepid data boosted the mood and put the US Dollar under selling pressure.
Wall Street recovered its poise despite softer-than-expected US employment and growth figures.
XAU/USD turned bullish in the near term and may run past the June high at $2,368.59.
A sharp US Dollar decline pushed XAU/USD above the $2,360 mark for the first time in over two weeks. A rough of tepid United States (US) data pushed the US Dollar down, although the major catalyst was the ISM Services PMI, which unexpectedly dropped to 48.8 in June after posting 53.8 in May, also missing the expected 52.5.
The country also reported that Challenger Job Cuts showed US-based employers announced 48,786 cuts in June, down 23.6% from the 63,816 cuts announced in May. Furthermore, the May Goods and Services Trade Balance posted a deficit of $75.1 billion, better than anticipated, while Initial Jobless Claims for the week ended June 28 surged to 238K, worse than the 235K anticipated by market players. Finally, the ADP report on private job creation showed that the sector added 150K new positions in June, below the revised 157K from May and missing the 160K expected.
Wall Street also gained impetus as a result of the better market mood. Only the Dow Jones Industrial Average trades in the red, down 0.12%. The S&P500 and the Nasdaq Composite, however, trade in the green, while government bond yields are down, further weighing on the Greenback.
XAU/USD short-term technical outlook
From a technical point of view, the daily chat for the XAU/USD pair shows the bright metal met buyers around a flat 20 Simple Moving Average (SMA), currently at around $2,330, while the 100 and 200 SMAs keep heading north far below the shorter one. Technical indicators, in the meantime, picked up momentum within positive levels, in line with another leg north. A relevant resistance level can be found at $2,368.59, the June monthly high.
In the near term, and according to the 4-hour chart, the risk also skews to the upside. XAU/USD trades above all its moving averages, although the 20 SMA advances between directionless, longer ones. Technical indicators, in the meantime, flirt with overbought readings without signs of upward exhaustion.
This is not the time of year that is typically good for natural gas, but it does make for a nice investment if you are willing to sit on it for a few months. That’s why I don’t use leverage, because natural gas is so erratic. As a retail trader, you have to be able to keep track of weather patterns in the northeastern part of the United Statest, the transmission flows on transmission lines in the United States, the weather in the Gulf of Mexico because it can shut down production, geopolitics, electricity demand and a whole host of other things.
This is not a market really suitable for retail traders. That being said, I know a lot of people like trading it for whatever reason, and therefore I always make sure that the people that listen to me know that it’s all about taking some of that extra leverage out of the position and becoming a longer term swing trader.
It’s not a scalpers market. It’s not a short term traders market. With that being said, I do think that we are more likely than not going to see a continuation of this pullback, but I do think somewhere closer to $2, you have the ability to really start building up a position maybe for fall when demand starts to pick back up.
For a look at all of today’s economic events, check out our economic calendar.
Silver prices (XAG/USD) began the day on a positive note, gaining momentum despite a strong US dollar and prevailing risk-on market sentiment.
Currently, silver trades around $29.7275, after reaching an intraday high of $29.7545. This bullish rally is largely due to growing expectations of Federal Reserve rate cuts in September and December. These expectations were reinforced by dovish comments from Federal Reserve Chair Jerome Powell on Tuesday.
Economic Concerns and Geopolitical Tensions
While the upward movement in silver prices is noticeable, several factors are exerting downward pressure. Concerns over a global economic slowdown, persistent geopolitical tensions, and political uncertainty in the US and Europe are significant. These elements are making traders cautious about taking aggressive positions in silver.
According to Powell, “We are prepared to adjust policy as necessary to sustain economic expansion.” This statement has increased investor anticipation for upcoming Federal Reserve actions, adding to the cautious sentiment in the market. Traders are particularly focused on the release of the FOMC meeting minutes, scheduled later in the US session, to gain clearer signals about future Fed policies.
In the meantime, key US economic data points such as the ADP report on private-sector employment and the ISM Services PMI are also being closely monitored. These indicators are expected to provide further insights into the economic landscape and influence silver prices.
Impact of US Economic Indicators on Silver Prices
On the US economic front, the dollar has strengthened, buoyed by robust labor market data exceeding expectations. This has tempered some investor expectations for a September rate cut by the Fed. The strong economic data indicates resilience in the economy, reducing immediate pressure for monetary easing. However, markets are still pricing in increased odds of a rate cut in September and potentially another in December.
Investors remain cautious as they await clarity on the Federal Reserve’s stance regarding rate cuts. Powell has expressed satisfaction with progress on inflation but emphasized the importance of sustained movement toward the 2% target before considering any rate reductions.
JOLTs job openings rose unexpectedly from 7.919 million in April to 8.140 million in May, surpassing economists’ expectations of 7.910 million. This increase indicates a strengthening US labor market, which has the potential to boost wages and disposable income. Increased disposable income could stimulate consumer spending, contributing to demand-led inflation pressures.
The strengthened US dollar and robust economic indicators may curb immediate silver price gains. However, improved consumer spending could support industrial demand and inflation pressures, benefiting silver in the longer term.
Silver Price Forecast: Technical Outlook
Silver is currently trading at $29.68, up 0.56%. The 2-hour chart reveals key levels, with the pivot point at $29.55. Immediate resistance is at $29.84, followed by $30.03 and $30.32. Support levels are at $29.32, $29.08, and $28.87.
Technical indicators show the 50 EMA at $29.35 and the 200 EMA at $29.50, indicating an upward trend. A bullish engulfing pattern further supports a buying trend in silver. Silver remains bullish above $29.55, but a break below this level could trigger a sharp selling trend.
Natural gas markets have continued to go a bit sideways as the market hangs around very low levels. Because of this, I’m simply sitting on my hands and waiting for the appropriate trading opportunity.
Natural gas markets have been sold off rather drastically over the last several months, as we have left the coldest part of the year for the United States. At this point, the $2.50 level underneath is offering support, and it is a level that is historically important as we have seen so much in the way of support at this level over the last several years. At this point, I’m not willing to sell this market, because quite frankly we don’t have that far to go before you can run into trouble. However, I’m not willing to buy this market as although it is oversold, the reality is that there are far too many reasons to think that natural gas will remain cheap.
NATGAS Video 14.02.19
After all, there is a massive oversupply of natural gas in the United States and Canada, which both could power the world for 300 years based upon proven gas in the ground. With that in mind, the fact that we rallied should get you interested in selling at signs of exhaustion. We have fallen so far that I think we need a significant rally though, probably to at least the $2.75 level, perhaps even the $3.00 level. As soon as we get to those levels and show signs of exhaustion, I will not hesitate to sell this market. From a technical standpoint, you could make an argument for a falling wedge, which is a slightly bullish pattern, but I will ignore those buying signals and simply look for an opportunity to sell at higher levels as it goes with the longer-term trend.
Please let us know what you think in the comments below
Gold price needs to crack the 50-day SMA for a sustained recovery, as the daily RSI prods 50 level.
Gold price is trading around a flatline near $2,330 early Wednesday, as traders consider the recent US jobs data and Federal Reserve (Fed) Chairman Jerome Powell’s speech, bracing for yet another busy US calendar.
Gold price awaits US ADP jobs data and Fed Minutes
Asian markets are trading mixed, shrugging off the positive close on Wall Street overnight. Weaker-then-expected China’s Caixin Services PMI rekindles economic growth concerns and dents the sentiment around the domestic stocks. The negative shift in the market mood somewhat helps limit the US Dollar decline while keeping Gold price slightly on the back foot.
However, the downside in Gold price remains capped, as the US Treasury bond yields continue to reel from the pain of dovish comments from Fed Chair Jerome Powell delivered on Tuesday at the European Central Bank (ECB) Forum on central banking in Sintra. The benchmark 10-year US Treasury yields nudged lower to 4.43% on Tuesday after one of its largest single-day gains of the year on Monday.
Though Powell cheered the recent inflation data, which clearly points to a disinflationary path, he quickly added that he wants to see more before being confident enough to start cutting interest rates.
Markets scaled up bets for a September rate cut slightly after Fed Chair Powell acknowledged progress in disinflation, as they perceived his comments as dovish. Currently, markets see a 67% chance of the Fed lowering rates in September, a tad higher than about 63% seen before Powell’s commentary.
Renewed dovish Fed expectations could continue to provide ‘dip-buying’ demand for Gold price, also as the latest World Gold Council (WGC) report showed a net 10 tons of Gold buying by central banks in May. The National Bank of Poland was the biggest Gold purchaser in May, adding 10 tons of gold to its reserves, the WGC report said.
All eyes now turn to the US ADP Employment Change report after the Job Openings and Labor Turnover Survey (JOLTS) showed Tuesday that the job openings rose to 8.14 million at the end of May, an increase from the 7.92 million job openings in April. The ADP data is expected to show 160K jobs gains in the US private sector last month, against a 152K increase in May.
Next of note for Gold price remains the Minutes of the Fed’s June 11-12 policy meeting, which could shed more insights on the central bank’s rate and inflation outlook, having a considerable impact on the value of the US Dollar and the Gold price.
Gold price technical analysis: Daily chart
With the 14-day Relative Strength Index (RSI) flirting with the 50 level and Gold price defending the 21-day Simple Moving Average (SMA) at $2,328, risks appear evenly split for traders.
Gold buyers need a sustained break above the 50-day SMA barrier at $2,338 to restart a meaningful recovery from the monthly low of $2,287.
The next topside barrier is seen at the $2,350 psychological level, above which the two-week high of $2,369 could be challenged.
Conversely, if the 21-day SMA resistance-turned-support at $2,328 fails to hold the fort, sellers could extend their control for a test of this week’s low of $2,319.
The $2,300 threshold will come into play should the selling momentum gather pace. The next strong support is aligned at the June low of $2,289.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Gold price oscillates in a familiar range near $2,330 early Wednesday.
The US Dollar licks wounds with US Treasury yields amid a cautious mood.
Gold price needs to crack the 50-day SMA for a sustained recovery, as the daily RSI prods 50 level.
Gold price is trading around a flatline near $2,330 early Wednesday, as traders consider the recent US jobs data and Federal Reserve (Fed) Chairman Jerome Powell’s speech, bracing for yet another busy US calendar.
Gold price awaits US ADP jobs data and Fed Minutes
Asian markets are trading mixed, shrugging off the positive close on Wall Street overnight. Weaker-then-expected China’s Caixin Services PMI rekindles economic growth concerns and dents the sentiment around the domestic stocks. The negative shift in the market mood somewhat helps limit the US Dollar decline while keeping Gold price slightly on the back foot.
However, the downside in Gold price remains capped, as the US Treasury bond yields continue to reel from the pain of dovish comments from Fed Chair Jerome Powell delivered on Tuesday at the European Central Bank (ECB) Forum on central banking in Sintra. The benchmark 10-year US Treasury yields nudged lower to 4.43% on Tuesday after one of its largest single-day gains of the year on Monday.
Though Powell cheered the recent inflation data, which clearly points to a disinflationary path, he quickly added that he wants to see more before being confident enough to start cutting interest rates.
Markets scaled up bets for a September rate cut slightly after Fed Chair Powell acknowledged progress in disinflation, as they perceived his comments as dovish. Currently, markets see a 67% chance of the Fed lowering rates in September, a tad higher than about 63% seen before Powell’s commentary.
Renewed dovish Fed expectations could continue to provide ‘dip-buying’ demand for Gold price, also as the latest World Gold Council (WGC) report showed a net 10 tons of Gold buying by central banks in May. The National Bank of Poland was the biggest Gold purchaser in May, adding 10 tons of gold to its reserves, the WGC report said.
All eyes now turn to the US ADP Employment Change report after the Job Openings and Labor Turnover Survey (JOLTS) showed Tuesday that the job openings rose to 8.14 million at the end of May, an increase from the 7.92 million job openings in April. The ADP data is expected to show 160K jobs gains in the US private sector last month, against a 152K increase in May.
Next of note for Gold price remains the Minutes of the Fed’s June 11-12 policy meeting, which could shed more insights on the central bank’s rate and inflation outlook, having a considerable impact on the value of the US Dollar and the Gold price.
Gold price technical analysis: Daily chart
With the 14-day Relative Strength Index (RSI) flirting with the 50 level and Gold price defending the 21-day Simple Moving Average (SMA) at $2,328, risks appear evenly split for traders.
Gold buyers need a sustained break above the 50-day SMA barrier at $2,338 to restart a meaningful recovery from the monthly low of $2,287.
The next topside barrier is seen at the $2,350 psychological level, above which the two-week high of $2,369 could be challenged.
Conversely, if the 21-day SMA resistance-turned-support at $2,328 fails to hold the fort, sellers could extend their control for a test of this week’s low of $2,319.
The $2,300 threshold will come into play should the selling momentum gather pace. The next strong support is aligned at the June low of $2,289.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
