The 1.94 swing high matches the previous trend low from April 2023 at 1.95. Therefore, it has some longer-term significance. It was exceeded to the upside over several days in early-March but there was no close above that price level. This means that a daily close above 1.95 will provide a sign of increasing demand and that a breakout above the 2.01 swing high is a bullish signal.
Also, notice that today’s advance exceeded the lower dashed blue declining parallel channel line, another sign of strength. Further, the trendline on the relative strength index momentum oscillator (RSI) was busted to the upside today. Nevertheless, what happens in the coming days will be more revealing than today’s price action.
Further Confirmation of Strength Needed
It doesn’t look like today will end above the 1.94 swing low. So, moving forward a daily close above that price level will provide confirmation of strength. And, on a daily close above the lower blue channel line, although it is more of a sign of strength rather than a reliable signal.
There are several upside price levels to watch, and more details will be discussed in the future. For now, the 38.2% Fibonacci retracement completes at 2.22. That area is also highlighted by the swing low from mid-December. If there is a rally above 2.01, higher targets become more likely of being tested.
For a look at all of today’s economic events, check out our economic calendar.
We just don’t know. But what I do know is that once we get below $1.50, suddenly natural gas drillers will stop drilling because they don’t get into business to lose money. So, I do think based on that and history, that this is an area that we will see a certain amount of accumulation. I don’t know if we see a run towards the $9 level like we did a couple of cycles ago, but a target of $2.50 is very realistic sometime this year.
We just don’t know when that’s going to be. Keep in mind there’s a lot of supply out there right now. So, we need something to drill down supply, be it demand or possibly some type of geopolitical situation in the Middle East. Full disclosure, this position is part of my trading account, but it’s about 2% of my total holdings. It’s not a big position at all, and therefore I never really pay attention to it as far as a profit and loss standpoint.
But every week or so, just to see if anything’s changed. Obviously not much has.
For a look at all of today’s economic events, check out our economic calendar.
Oil prices experienced a slight increase in Asian trading on Friday, positioning for a weekly gain amidst continuous geopolitical tensions in the Middle East and expectations of tighter supply. However, the gains were modest as the market awaits crucial U.S. inflation data, which will provide further insights into potential interest rate movements.
The drop in the U.S. dollar, driven by disappointing U.S. economic growth figures, also provided some support to oil prices. The natural gas and oil forecast remains influenced by these dynamics, with reduced U.S. inventories indicating tighter oil markets and ongoing Middle East conflicts maintaining a risk premium on oil prices.
The crude oil markets have been very noisy over the last several days, and at this point in time it’s obvious to me that the market is going to continue to search for some type of stability.
After all, we have seen a massive run higher, followed by a massive selloff that has made both grades of crude oil that I follow very difficult to hang onto.
West Texas Intermediate Crude
The WTI Crude market has gone back and forth during the early hours on Thursday, as we continue to dance around the $82.50 level. Furthermore, we also have the 50-Day EMA underneath offering support, and we are essentially in the middle of the overall consolidation range between the $80 level on the bottom, and the $85 level on the top. As things stand right now, this is a market that looks very neutral, but it seems as if we are completely ignoring a lot of the geopolitical propellants out there that could jump into this market.
Brent Crude
Brent markets of course have behave very similarly, with the 50-Day EMA hanging around the $85.75 level. This is a market that seems like it is trying to sort out what it was to do as well, with the $84.50 level underneath being a major support level, and the $90 level above being a major resistance barrier. As we are close to the middle of the market, I don’t necessarily think we are in a scenario where you would see a lot of certainty, so therefore I think you have to look at this through the prism of either a longer-term trade that is trying to set up, or to simply trading back and forth.
Looking at the overall situation around the world, supply is still an issue, and we obviously have a lot of geopolitical concerns. Those geopolitical concerns could cause massive headaches for crude oil markets, and then of course the latest headlines coming out of Iran or Israel could have a direct effect on these markets. Because of this, be very cautious with your position sizing.
Monthly support is also at the 1.59 swing low. During April natural gas has remained within the range from March forming a possible second sequential inside month. Therefore, a sustained breakdown below 1.59, if it occurs before the end of the month, will trigger an inside month breakdown from March. That’s a bearish signal that could be followed by an expansion of volatility.
Strong Support at or Above 1.52 May Continue
As noted above, the 1.52 price level is significant and may continue to act as support. Consequently, if volatility expands there is a possibility the 1.52 level is broken. If that happens the next lower target is around 1.44, a 29-year low. However, there is another price area to watch at 1.49. That is the target from an extended retracement of the six-month rally that began from the prior trend low a year ago.
Contraction in Volatility
If April ends without a breakdown below last month’s low, there will be two inside months further highlighting the decline in volatility experienced recently. As price compresses it prepares for its next move and a pickup in volatility. That could come from a bounce off monthly support or a breakdown.
For a look at all of today’s economic events, check out our economic calendar.
The US Gross Domestic Product missed expectations, spurring concerns.
Inflationary pressures increased in the United States in the first quarter of the year.
XAU/USD holds on to modest intraday gains, with the bearish case losing steam.
Spot Gold remains confined to familiar levels, trading at around $2,330 in the American afternoon. XAU/USD experienced some volatility following the release of United States (US) macroeconomic data, which put a sour taste in traders’ mouths. The country released the preliminary estimate of the Q1 Gross Domestic Product, which showed the economy grew at an annual pace of 1.6% in the three months to March, missing the expected 2.5% and much weaker than the 3.4% posted in the last quarter of 2023.
Furthermore, the Bureau of Economic Analysis (BEA) reported that the Personal Consumption Expenditures (PCE) Price Index rose at a 3.4% annualized pace for the quarter, much higher than the previous 1.8% and the biggest gain in a year. In a few words, growth slowed, but the economy continued expanding while inflation picked up. Such a scenario further delays a potential rate cut from the Federal Reserve (Fed). The US Dollar surged while Wall Street plummeted as an immediate reaction to the news. The USD, however, was unable to preserve its momentum as US data throughout the week has been disappointing.
The initial fears receded, and US indexes trimmed part of their losses but retain the red. Nevertheless, continued demand for safety maintained XAU/USD evenly balanced.
XAU/USD short-term technical outlook
From a technical point of view, XAU/USD has made little progress. It is trading just above the 23.6% Fibonacci retracement of the $1,996.06/$2,431.43 rally. In the daily chart, a bullish 20 Simple Moving Average (SMA) stands around the same level, with the price struggling to extend gains above it. The longer moving averages, in the meantime, maintain their bullish slopes far below the shorter one. Finally, the Momentum indicator keeps heading south at around its 100 level, but the Relative Strength Index (RSI) indicator turned north within positive levels.
Generally speaking, Gold tends to benefit against the USD in a risk-averse environment, which skews the risk to the upside. In the near term, and according to the 4-hour chart, XAU/USD offers a neutral-to-bullish stance. The Momentum indicator is losing its upward strength but holds above its 100 line, while the RSI indicator consolidates around 47, reflecting the absence of apparent directional strength. At the same time, a mildly bullish 100 SMA provides dynamic resistance at around $2,343.50, while the 20 SMA aims lower below the current level.
Support levels: 2,310.00 2,295.20 2,282.90
Resistance levels: 2,343.50 2,361.55 2,372.90
XAU/USD Current price: $2,329.29
The US Gross Domestic Product missed expectations, spurring concerns.
Inflationary pressures increased in the United States in the first quarter of the year.
XAU/USD holds on to modest intraday gains, with the bearish case losing steam.
Spot Gold remains confined to familiar levels, trading at around $2,330 in the American afternoon. XAU/USD experienced some volatility following the release of United States (US) macroeconomic data, which put a sour taste in traders’ mouths. The country released the preliminary estimate of the Q1 Gross Domestic Product, which showed the economy grew at an annual pace of 1.6% in the three months to March, missing the expected 2.5% and much weaker than the 3.4% posted in the last quarter of 2023.
Furthermore, the Bureau of Economic Analysis (BEA) reported that the Personal Consumption Expenditures (PCE) Price Index rose at a 3.4% annualized pace for the quarter, much higher than the previous 1.8% and the biggest gain in a year. In a few words, growth slowed, but the economy continued expanding while inflation picked up. Such a scenario further delays a potential rate cut from the Federal Reserve (Fed). The US Dollar surged while Wall Street plummeted as an immediate reaction to the news. The USD, however, was unable to preserve its momentum as US data throughout the week has been disappointing.
The initial fears receded, and US indexes trimmed part of their losses but retain the red. Nevertheless, continued demand for safety maintained XAU/USD evenly balanced.
XAU/USD short-term technical outlook
From a technical point of view, XAU/USD has made little progress. It is trading just above the 23.6% Fibonacci retracement of the $1,996.06/$2,431.43 rally. In the daily chart, a bullish 20 Simple Moving Average (SMA) stands around the same level, with the price struggling to extend gains above it. The longer moving averages, in the meantime, maintain their bullish slopes far below the shorter one. Finally, the Momentum indicator keeps heading south at around its 100 level, but the Relative Strength Index (RSI) indicator turned north within positive levels.
Generally speaking, Gold tends to benefit against the USD in a risk-averse environment, which skews the risk to the upside. In the near term, and according to the 4-hour chart, XAU/USD offers a neutral-to-bullish stance. The Momentum indicator is losing its upward strength but holds above its 100 line, while the RSI indicator consolidates around 47, reflecting the absence of apparent directional strength. At the same time, a mildly bullish 100 SMA provides dynamic resistance at around $2,343.50, while the 20 SMA aims lower below the current level.
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Investors are focusing on several critical economic indicators scheduled for release this week. The US gross domestic product (GDP) for the first quarter is expected to show a growth of 2.4%, according to economists surveyed by Dow Jones. Moreover, weekly initial jobless claims and the personal consumption expenditures (PCE) price index, which is the Fed’s favored gauge of inflation, are also due. These data points are likely to be significant in shaping the Federal Reserve’s upcoming policy decisions.
Market Sentiment and Expectations
While the market is not anticipating changes in interest rates at the next Federal Reserve meeting, investors are watching for hints of potential rate cuts later this year. Market sentiment, as tracked by CME Group’s FedWatch tool, suggests a possible rate cut by September, depending heavily on the trend of incoming economic data. Furthermore, gold prices have corrected significantly, dropping over $100 from the April 12 peak of $2,431.29, influenced by profit-taking and easing tensions in the Middle East.
Short-Term Outlook for Gold
The short-term direction for gold prices will depend heavily on the upcoming US economic data releases. If the core PCE index meets or falls below expectations, the dollar could weaken further, which might push gold prices higher. On the other hand, if inflation figures come in above expectations, gold might face downward pressure as it would likely lead to a more aggressive interest rate stance from the Fed.
In conclusion, the gold market is displaying cautious optimism, bolstered by a weakening dollar and strategic purchases from Asia, particularly China. However, the upcoming US economic data and Federal Reserve policy decisions are key factors that could influence market sentiment. Traders are preparing for a potential uptick in gold prices, dependent on favorable economic reports and stable interest rate projections.
Oil prices remained stable on Thursday, balancing the effects of decreased fuel demand in the U.S.—the world’s largest oil consumer—with potential geopolitical conflicts in the Middle East. Recent data from the U.S. Energy Information Administration revealed a significant drop in gasoline and distillate fuel demand, underscoring a slowdown in U.S. economic activities.
Despite this, escalating tensions in the Gaza Strip and potential disruptions in Middle Eastern oil supplies are keeping market sentiments cautious. Analysts predict that summer demand, supply constraints, and Chinese and Eurozone economic data will be key drivers of oil prices this quarter.
Gold price pauses losing streak, as focus shifts to the high-impact US Q1 GDP data.
US Dollar decline offers comfort to Gold price amid ebbing Middle East tensions.
Gold price closes Wednesday below 21-day SMA but RSI stays bullish.
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold price find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter Gross Domestic Product (GDP) due later on Thursday.
Will US GDP data rescue Gold price?
Risk-off sentiment remains in full swing in Asia this Thursday, as market participants sulk following Meta’s weak revenue guidance even though the company’s first-quarter earnings results topped estimates. Meta shares plunged 16% in post-market trading after the company said it expects sales in the second quarter of $36.5 billion to $39 billion, below analysts’ estimate of $38.3 billion. Meanwhile, Meta’s net income more than doubled to $12.37 billion from $5.71 billion over the year.
Investors also stay risk-averse amid mounting risks of a Japanese forex market intervention, as the USD/JPY pair renews fresh 34-year highs near 155.50. Additionally, a sense of caution also prevails, as the upcoming quarterly US GDP and PCE inflation prints could shed more light on the US economic resilience, as well as, on the Federal Reserve (Fed) interest rate outlook.
Weak S&P Global US business PMI data already cast doubt on the US economic prospects amid increased expectations that the Fed could maintain interest rates ‘higher for longer’. Markets price in the first Fed rate cut in September, according to the CME Group’s FedWatch Tool. Meanwhile, the total easing expected this year would just be 40 basis points (bps), a sea change from about 150 basis points of cuts priced in at the beginning of the year, per Reuters.
Meanwhile, the latest data from the UK’s Office for National Statistics (ONS) showed early Thursday that shipping traffic through the Suez Canal artery in Egypt has plunged by 66%, in the face of the Iran-backed Houthi attacks, flagging higher inflation risks.
Amidst a risk-off mood and worries over inflation resurgence worldwide, Gold price is attempting a tepid recovery. Although any upside attempts are likely to remain limited ahead of the key US data flow.
Gold price technical analysis: Daily chart
As observed on the daily chart, Gold price settled Wednesday below the key 21-day Simple Moving Average (SMA), then at $2,318, reinforcing bearish interests.
However, the 14-day Relative Strength Index (RSI), a leading indicator, still holds well above the midline, near 56.00, indicating that a renewed downside in Gold price could be seen as a good entry position for buyers.
If Gold sellers regain control, Gold price could challenge the $2,300 threshold again, below which Tuesday’s low of $2,291 will be targetted. The last line of defense for Gold buyers could be the early April low near $2,265.
On the flip side, a sustained recovery above the 21-day SMA support-turned-resistance, now at $2,324, could revive bullish commitments for a test of the $2,350 psychological level.
Further up, Gold buyers will target the static resistance near $2,360-$2,365.
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 pauses losing streak, as focus shifts to the high-impact US Q1 GDP data.
US Dollar decline offers comfort to Gold price amid ebbing Middle East tensions.
Gold price closes Wednesday below 21-day SMA but RSI stays bullish.
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold price find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter Gross Domestic Product (GDP) due later on Thursday.
Will US GDP data rescue Gold price?
Risk-off sentiment remains in full swing in Asia this Thursday, as market participants sulk following Meta’s weak revenue guidance even though the company’s first-quarter earnings results topped estimates. Meta shares plunged 16% in post-market trading after the company said it expects sales in the second quarter of $36.5 billion to $39 billion, below analysts’ estimate of $38.3 billion. Meanwhile, Meta’s net income more than doubled to $12.37 billion from $5.71 billion over the year.
Investors also stay risk-averse amid mounting risks of a Japanese forex market intervention, as the USD/JPY pair renews fresh 34-year highs near 155.50. Additionally, a sense of caution also prevails, as the upcoming quarterly US GDP and PCE inflation prints could shed more light on the US economic resilience, as well as, on the Federal Reserve (Fed) interest rate outlook.
Weak S&P Global US business PMI data already cast doubt on the US economic prospects amid increased expectations that the Fed could maintain interest rates ‘higher for longer’. Markets price in the first Fed rate cut in September, according to the CME Group’s FedWatch Tool. Meanwhile, the total easing expected this year would just be 40 basis points (bps), a sea change from about 150 basis points of cuts priced in at the beginning of the year, per Reuters.
Meanwhile, the latest data from the UK’s Office for National Statistics (ONS) showed early Thursday that shipping traffic through the Suez Canal artery in Egypt has plunged by 66%, in the face of the Iran-backed Houthi attacks, flagging higher inflation risks.
Amidst a risk-off mood and worries over inflation resurgence worldwide, Gold price is attempting a tepid recovery. Although any upside attempts are likely to remain limited ahead of the key US data flow.
Gold price technical analysis: Daily chart
As observed on the daily chart, Gold price settled Wednesday below the key 21-day Simple Moving Average (SMA), then at $2,318, reinforcing bearish interests.
However, the 14-day Relative Strength Index (RSI), a leading indicator, still holds well above the midline, near 56.00, indicating that a renewed downside in Gold price could be seen as a good entry position for buyers.
If Gold sellers regain control, Gold price could challenge the $2,300 threshold again, below which Tuesday’s low of $2,291 will be targetted. The last line of defense for Gold buyers could be the early April low near $2,265.
On the flip side, a sustained recovery above the 21-day SMA support-turned-resistance, now at $2,324, could revive bullish commitments for a test of the $2,350 psychological level.
Further up, Gold buyers will target the static resistance near $2,360-$2,365.
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.
