• Gold price retreats further from the new all-time-high of $2,450 set on Monday.
• The US Dollar extends rebound with US Treasury bond yields, as risk sentiment sours.
• Downside appears limited for Gold, as RSI stays bullish on the daily chart.
• The focus shifts to more Fedspeak for policy cues and the next Gold price move.

Gold price extends pullback from the lifetime high of $2,450 set on Monday, as the US Dollar (USD) draws haven demand amid broad risk aversion. Attention again turns toward upcoming speeches from the Federal Reserve (Fed) policymakers that dominate early this week, in the absence of top-tier US economic events.

Gold price retreats ahead of more Fedspeak

The week set off with a bunch of Fed officials taking up the rostrum, adopting a cautious stance on the inflation and interest rate outlook. The Fedspeak suggested that even though rate cuts remain on the table later this year, expectations for 75 basis points (bps) rate cuts waned significantly.

Cleveland Fed President Loretta Mester warned on Monday that “inflation risks are tilted to the upside,” adding that she no longer thinks three rate cuts in 2024 are appropriate. San Francisco Fed President Mary Daly said that while she expects shelter inflation to slowly improve, the Fed policymaker doesn’t expect progress to be quick.

Fed Vice Chair for Supervision Michael Barr said that the Fed is in a good position to hold the policy steady and watch the economy, per Reuters. Meanwhile, Fed Vice Chair of the Board of Governors Phillip Jefferson noted that it was too early to tell if the recent slowdown in the disinflationary process will be long-lasting.

These cautious remarks helped the US Dollar find demand due to easing bets of aggressive Fed rate cuts while also fuelling a rebound in the US Treasury bond yield. Gold price, thus, retraced from fresh record highs.

Gold price jumped to $2,450, a new all-time high, after reports Iran’s President Ebrahim Raisi and Foreign Minister Hossein Amirabdollahian died in a helicopter crash in Iran’s East Azerbaijan province hit wires in the Asian hours on Monday.

In Tuesday’s trading so far, risk-aversion keeps the safe-haven flows into the US Dollar intact, exerting further selling pressure on Gold price. Markets turn cautious ahead of a slew of speeches from Fed policymakers, including Vice Chair John Williams and Governor Christopher Waller.

Also, Gold traders also refrain from placing fresh positions ahead of Wednesday’s Fed Minutes and Nvidia earnings results, which could have a signficant impact on risk sentiment and the value of the US Dollar.

Gold price technical analysis: Daily chart

As observed on the daily chart, the 14-day Relative Strength Index (RSI) has turned south but holds above the midline to currently hover near 62.60, suggesting that the downside appears limited for Gold price.

Gold buyers must find acceptance above the record high of $2,441 if the $2,450 psychological level needs to be taken out.

A sustained move above the latter could open doors for a fresh rally toward $2,500.

However, if Gold sellers need to defend the $2,400 round figure. Failure to do so could trigger a fresh drop toward Friday’s low of $2,374.

The next downside target is seen at the 21-day Simple Moving Average (SMA) at $2,344.

 

• Gold price retreats further from the new all-time-high of $2,450 set on Monday.
• The US Dollar extends rebound with US Treasury bond yields, as risk sentiment sours.
• Downside appears limited for Gold, as RSI stays bullish on the daily chart.
• The focus shifts to more Fedspeak for policy cues and the next Gold price move.

Gold price extends pullback from the lifetime high of $2,450 set on Monday, as the US Dollar (USD) draws haven demand amid broad risk aversion. Attention again turns toward upcoming speeches from the Federal Reserve (Fed) policymakers that dominate early this week, in the absence of top-tier US economic events.

Gold price retreats ahead of more Fedspeak

The week set off with a bunch of Fed officials taking up the rostrum, adopting a cautious stance on the inflation and interest rate outlook. The Fedspeak suggested that even though rate cuts remain on the table later this year, expectations for 75 basis points (bps) rate cuts waned significantly.

Cleveland Fed President Loretta Mester warned on Monday that “inflation risks are tilted to the upside,” adding that she no longer thinks three rate cuts in 2024 are appropriate. San Francisco Fed President Mary Daly said that while she expects shelter inflation to slowly improve, the Fed policymaker doesn’t expect progress to be quick.

Fed Vice Chair for Supervision Michael Barr said that the Fed is in a good position to hold the policy steady and watch the economy, per Reuters. Meanwhile, Fed Vice Chair of the Board of Governors Phillip Jefferson noted that it was too early to tell if the recent slowdown in the disinflationary process will be long-lasting.

These cautious remarks helped the US Dollar find demand due to easing bets of aggressive Fed rate cuts while also fuelling a rebound in the US Treasury bond yield. Gold price, thus, retraced from fresh record highs.

Gold price jumped to $2,450, a new all-time high, after reports Iran’s President Ebrahim Raisi and Foreign Minister Hossein Amirabdollahian died in a helicopter crash in Iran’s East Azerbaijan province hit wires in the Asian hours on Monday.

In Tuesday’s trading so far, risk-aversion keeps the safe-haven flows into the US Dollar intact, exerting further selling pressure on Gold price. Markets turn cautious ahead of a slew of speeches from Fed policymakers, including Vice Chair John Williams and Governor Christopher Waller.

Also, Gold traders also refrain from placing fresh positions ahead of Wednesday’s Fed Minutes and Nvidia earnings results, which could have a signficant impact on risk sentiment and the value of the US Dollar.

Gold price technical analysis: Daily chart

As observed on the daily chart, the 14-day Relative Strength Index (RSI) has turned south but holds above the midline to currently hover near 62.60, suggesting that the downside appears limited for Gold price.

Gold buyers must find acceptance above the record high of $2,441 if the $2,450 psychological level needs to be taken out.

A sustained move above the latter could open doors for a fresh rally toward $2,500.

However, if Gold sellers need to defend the $2,400 round figure. Failure to do so could trigger a fresh drop toward Friday’s low of $2,374.

The next downside target is seen at the 21-day Simple Moving Average (SMA) at $2,344.

 

• Gold price retreats further from the new all-time-high of $2,450 set on Monday.
• The US Dollar extends rebound with US Treasury bond yields, as risk sentiment sours.
• Downside appears limited for Gold, as RSI stays bullish on the daily chart.
• The focus shifts to more Fedspeak for policy cues and the next Gold price move.

Gold price extends pullback from the lifetime high of $2,450 set on Monday, as the US Dollar (USD) draws haven demand amid broad risk aversion. Attention again turns toward upcoming speeches from the Federal Reserve (Fed) policymakers that dominate early this week, in the absence of top-tier US economic events.

Gold price retreats ahead of more Fedspeak

The week set off with a bunch of Fed officials taking up the rostrum, adopting a cautious stance on the inflation and interest rate outlook. The Fedspeak suggested that even though rate cuts remain on the table later this year, expectations for 75 basis points (bps) rate cuts waned significantly.

Cleveland Fed President Loretta Mester warned on Monday that “inflation risks are tilted to the upside,” adding that she no longer thinks three rate cuts in 2024 are appropriate. San Francisco Fed President Mary Daly said that while she expects shelter inflation to slowly improve, the Fed policymaker doesn’t expect progress to be quick.

Fed Vice Chair for Supervision Michael Barr said that the Fed is in a good position to hold the policy steady and watch the economy, per Reuters. Meanwhile, Fed Vice Chair of the Board of Governors Phillip Jefferson noted that it was too early to tell if the recent slowdown in the disinflationary process will be long-lasting.

These cautious remarks helped the US Dollar find demand due to easing bets of aggressive Fed rate cuts while also fuelling a rebound in the US Treasury bond yield. Gold price, thus, retraced from fresh record highs.

Gold price jumped to $2,450, a new all-time high, after reports Iran’s President Ebrahim Raisi and Foreign Minister Hossein Amirabdollahian died in a helicopter crash in Iran’s East Azerbaijan province hit wires in the Asian hours on Monday.

In Tuesday’s trading so far, risk-aversion keeps the safe-haven flows into the US Dollar intact, exerting further selling pressure on Gold price. Markets turn cautious ahead of a slew of speeches from Fed policymakers, including Vice Chair John Williams and Governor Christopher Waller.

Also, Gold traders also refrain from placing fresh positions ahead of Wednesday’s Fed Minutes and Nvidia earnings results, which could have a signficant impact on risk sentiment and the value of the US Dollar.

Gold price technical analysis: Daily chart

As observed on the daily chart, the 14-day Relative Strength Index (RSI) has turned south but holds above the midline to currently hover near 62.60, suggesting that the downside appears limited for Gold price.

Gold buyers must find acceptance above the record high of $2,441 if the $2,450 psychological level needs to be taken out.

A sustained move above the latter could open doors for a fresh rally toward $2,500.

However, if Gold sellers need to defend the $2,400 round figure. Failure to do so could trigger a fresh drop toward Friday’s low of $2,374.

The next downside target is seen at the 21-day Simple Moving Average (SMA) at $2,344.

 

Oil prices declined in early Asian trading on Tuesday, with expectations of sustained U.S. inflation and higher interest rates dampening consumer and industrial demand.

Both benchmarks fell less than 1% on Monday as Federal Reserve officials awaited clearer signs of slowing inflation before considering rate cuts. Analysts noted fears of weaker demand due to delayed rate cuts.

Interim Higher Price Targets from ABCD Pattern

Nevertheless, there is no assurance the higher targets will be reached. Interim price targets include 2.80 and 2.86. They are derived from the 2.5% and 261.8% extensions of the rising ABCD pattern, respectively. Another price level of 2.88 is marked from the June 2023 swing high. Although all previous potential targets from the rising ABCD pattern have been exceeded during the current rally, a top in natural gas will be found at some point, and it may match with an ABCD target.

The ABCD pattern looks to identify price symmetry between the second CD leg of the advance and the initial AB leg. Symmetry first occurs when the price appreciation in each advance matches. Subsequently, Fibonacci ratios are used to identify extended targets for the CD leg. For example, for the 261.8% target, the price distance of the AB leg is multiplied by the Fibonacci ratio to derive a target of 2.86.

Relative Strength of Current Rally

The current rally of 73.5% is well above the prior two greatest advances since the first bottom of the downtrend in February 2023. There were four prior larger rallies from 34.7% to 53.9%. The current advance of 73.5% clearly exceeds the previous rallies. This points to a likely change in character as natural gas further shows strength and provides signs of a transition from a downtrend to an uptrend, in which case the 3.00 price zone becomes more likely to be reached.

For a look at all of today’s economic events, check out our economic calendar.

Production Declines and Maintenance

A significant driver of the bullish sentiment in natural gas markets is the decline in domestic production. Leading producers like EQT and Chesapeake Energy have postponed well completions and reduced drilling activities in response to earlier price drops, contributing to an approximate 9% production decrease in 2024. Additionally, the near-full service return of the Freeport LNG plant in Texas has elevated gas flows to LNG export facilities, tightening supply further.

Record High Gas Flows to Freeport LNG

Natural gas flowing to Freeport LNG’s export plant in Texas hit a five-month high, according to LSEG data. This increase followed the return of a liquefaction train after a brief upset. U.S. gas futures at the Henry Hub benchmark have soared by around 59% over the past three weeks, partly due to increased feedgas at Freeport following an outage in late April.

As of Friday, gas flows to the seven major U.S. LNG export plants rose from an average of 11.9 billion cubic feet per day (bcfd) in April to 12.7 bcfd in May, with Freeport’s 2.1-bcfd plant contributing significantly.

EIA Report and Inventory Levels

June natural gas prices saw significant gains, supported by a U.S. Energy Information Administration (EIA) report showing a smaller-than-expected increase in natural gas inventories. For the week ending May 10, inventories rose by 70 billion cubic feet (bcf), short of the forecasted 76 bcf and the five-year average of 90 bcf. Despite this, total natural gas inventories were still up 17.5% year-on-year and 30.8% above the five-year seasonal average.

Lower-48 states’ dry gas production on Thursday was reported at 98.3 bcf per day, marking a 2.1% year-on-year decline, according to Bloomberg New Energy Finance (BNEF). Concurrently, gas demand in these states stood at 64.4 bcf per day, a 2.7% decrease from the previous year. LNG exports from U.S. terminals were at 13.2 bcf per day, up 4.0% week-on-week, indicating robust international demand.

Market Forecast

Given the current market conditions—reduced storage increases, lower production, and strong LNG exports—natural gas futures are likely to maintain their upward trend in the short term. However, potential cooler weather could temper this bullish outlook by reducing immediate demand for natural gas. Traders should remain vigilant regarding inventory reports and weather forecasts to navigate this volatile market effectively.

At 09:38 GMT, Light Crude Oil Futures are trading $79.36, down $0.22 or -0.28%.

Iranian President Dies in Helicopter Crash

Iranian President Ebrahim Raisi and his foreign minister died in a helicopter crash in the mountainous terrain of East Azerbaijan province. The crash was attributed to icy weather conditions, and the wreckage was located on Monday, causing shockwaves through the market due to potential instability in one of the world’s major oil producers.

Health Concerns for Saudi King

Separately, Saudi Crown Prince Mohammed bin Salman postponed his visit to Japan citing health issues faced by King Salman. The 88-year-old king is undergoing treatment for lung inflammation. This development adds another layer of uncertainty in the energy market, which is closely monitoring the health of the Saudi monarch, a key figure in global oil politics.

OPEC+ Maintains Oil Demand Forecast

OPEC’s latest report maintained its forecast for strong global oil demand growth in 2024, predicting a rise of 2.25 million barrels per day (bpd). The report also highlighted a shift in focus towards OPEC+ demand, underscoring the group’s significance in the current market framework. OPEC+ will meet on June 1 to discuss extending voluntary output cuts into the second half of the year.

U.S. Strategic Petroleum Reserve Refill

In the U.S., the government capitalized on the recent dip in oil prices, purchasing 3.3 million barrels at $79.38 each to refill the Strategic Petroleum Reserve. This move follows the significant stockpile sales of 2022, aimed at stabilizing the market.

Market Forecast: Bullish Outlook

Given the geopolitical uncertainties and positive economic indicators from major oil consumers, the crude oil market is expected to maintain a somewhat bullish outlook in the short term. The potential for further price increases remains, particularly as market participants await clarity on OPEC+ output policy decisions in the upcoming meeting.

Inflation Data Boosts Rate Cut Hopes

Last week’s U.S. inflation data revealed consumer prices rose less than anticipated in April, reinforcing the belief that inflation is on a downward trend. This data has fueled speculation that the Federal Reserve may cut interest rates as early as September. Lower interest rates tend to benefit gold by reducing the opportunity cost of holding non-yielding assets.

Market Reactions to Global Events

Despite recent geopolitical tensions, particularly the death of Iranian President Ebrahim Raisi, a potential successor to Supreme Leader Ayatollah Ali Khamenei, safe-haven demand for gold has not notably increased. Instead, the current rally appears more linked to economic factors, such as U.S. inflation trends and China’s measures to stabilize its property sector, which have broader implications for metals markets.

Treasury Yields and Fed’s Stance

U.S. Treasury yields remained steady on Monday as investors awaited further economic data and comments from Federal Reserve officials. Key data points this week include home sales figures and durable goods orders, alongside the Fed’s meeting minutes, which will provide insights into the central bank’s economic outlook and policy direction. The Fed has maintained that interest rates will not be cut until there is greater confidence in inflation easing to the 2% target.

Dollar Trends and Future Rate Cuts

The U.S. dollar edged lower as traders anticipated more clarity on the interest rate outlook. Despite the cooling inflation data, Federal Reserve officials have been cautious about predicting imminent rate cuts. Market expectations have adjusted accordingly, now pricing in a potential rate cut by November. The upcoming Personal Consumption Expenditures (PCE) price index report on May 31 will be a critical indicator for future Fed decisions.

Market Forecast

Given the current economic indicators and the anticipation of further dovish signals from the Federal Reserve, gold prices are likely to remain bullish in the short term. Traders should monitor upcoming economic data and Fed communications for cues on the timing and magnitude of potential rate cuts, which will be pivotal in shaping gold’s market movement.

Technical Analysis

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Demand Optimism and Inventory Declines

Recent declines in oil and refined product inventories at major global trading hubs have sparked optimism about oil demand growth. This reverses the trend of rising stockpiles that had previously pressured crude oil prices. As of Thursday, Brent crude futures were down around 10% from their peak of $92.18 a barrel on April 12.

U.S. Economic Indicators Boost Sentiment

Economic indicators from the United States have fueled optimism over global demand. U.S. consumer prices rose less than expected in April, which has raised expectations of lower interest rates. This expectation was further supported by data indicating a stabilizing U.S. job market. Lower interest rates could weaken the U.S. dollar, making oil cheaper for investors holding other currencies and boosting demand.

China’s Industrial Output and Russian Supply Concerns

China’s industrial output increased by 6.7% year on year in April, accelerating from 4.5% in March, indicating a recovery in its manufacturing sector and potential stronger future demand. Additionally, disruptions in Russian oil infrastructure, such as the recent Ukrainian drone attack on the Tuapse oil refinery, have also contributed to price support.

OPEC+ Meeting and Market Outlook

Investors are now looking ahead to the OPEC+ meeting on June 1 for further direction. With two consecutive weeks of declines in U.S. crude stockpiles and expectations of additional economic stimulus measures from China, analysts are optimistic. Financial markets have placed significant bets on a September interest rate cut by the Federal Reserve, which could further support commodity prices.

Market Forecast: Bullish Outlook

Given the improving demand indicators from the U.S. and China, alongside inventory declines and potential monetary easing, the short-term outlook for crude oil prices appears bullish. Traders should monitor upcoming economic data and OPEC+ decisions, as these factors will likely influence market sentiment and price movements.

• Gold built on previous weeks gains and advanced above $2,400.
• The near-term technical perspective suggests that the bullish outlook remains unchanged.
• Fedspeak and FOMC Minutes could influence XAU/USD’s action next week.

Gold (XAU/USD) price continued to push higher this week and rose above $2,400 on Friday, gaining nearly 2% for the week. Investors will continue to scrutinize comments from Federal Reserve (Fed) officials next week and look for fresh hints on the timing of the policy pivot in the minutes of the April 30-May 1 meeting.

Gold benefited from retreating US Treasury bond yields

Gold started the new week under bearish pressure and lost nearly 1% on Monday. In the absence of fundamental drivers, however, XAU/USD’s action looked to be a technical correction following the upsurge seen in the second half of the previous week.

The data published by the US Bureau of Labor Statistics (BLS) showed on Tuesday that the Producer Price Index (PPI) rose 2.2% on a yearly basis in April. This reading followed the 1.8% increase recorded in March and came in line with the market expectation. The immediate reaction to this data caused the US Dollar (USD) to weaken and allowed Gold to regain its traction. While speaking at the Foreign Bankers’ Association’s Annual General Meeting later in the day, Fed Chairman Jerome Powell noted that the PPI data was mixed and reiterated that the restrictive policy may take longer than expected to bring inflation down. These comments helped the USD limit its losses and capped XAU/USD’s upside.

On Wednesday, the BLS reported that annual inflation in the US, as measured by the change in the Consumer Price Index (CPI), edged lower to 3.4% in April from 3.5% in March. In the same period, core CPI inflation, which excludes volatile food and energy prices, arrived at 3.6% and met analysts’ estimates. On a monthly basis, the CPI and the core CPI both rose 0.3%. The benchmark 10-year US Treasury bond yield declined over 2% after the April inflation report and allowed Gold to push higher toward $2,400. Meanwhile, other data from the US showed that Retail Sales remained unchanged at $705.2 billion in April. 

In the second half of the week, Fed officials adopted a cautious tone regarding the timing of the policy pivot and helped the USD find a foothold. In turn, Gold corrected lower on Thursday. 

New York Fed President John Williams said that he doesn’t see the need for a rate cut in the near term. Commenting on the April CPI reading, “kind of a positive development after a few months, where the data were disappointing,” Williams told Reuters in an exclusive interview. Richmond Fed President Thomas Barkin told CNBC that the latest CPI data showed that inflation was not where the Fed was trying to get, and Atlanta Fed President Bostic argued that a continued fall in inflation could make it appropriate to reduce the policy rate later in the year. 

The action in financial markets remained subdued in the first half of the day on Friday. Boosted by week-end flows, Gold turned north in the American session and reached its highest level in nearly a month above $2,400.

Gold investors await more Fedspeak, FOMC Minutes

S&P Global’s preliminary Manufacturing and Services PMI data for May will be next week’s high-tier data releases from the US on Thursday. In case these data come in below 50 and show a contraction in the private sector’s business activity, the USD could come under renewed selling pressure with the immediate reaction and open the door for a leg higher in XAU/USD. On the other hand, the USD could find demand if PMI surveys point to an acceleration in the private sector’s expansion rate.

Throughout next week, several Fed policymakers will be delivering speeches. According to the CME FedWatch Tool, markets are currently pricing in a 33% probability that the Fed will leave the policy rate unchanged in September. Although Fed officials are unlikely to say whether September will be the right time to lower the interest rates, their comments on the economic outlook and inflation developments could influence rate cut odds. If policymakers reiterate the need to see several more good monthly inflation data before considering a policy pivot, investors could reassess the probability of a rate cut in September and help the USD stay resilient, limiting Gold’s upside. In case officials voice their concerns over the loosening conditions in the labor market and/or the growing uncertainty surrounding the growth outlook, US Treasury bond yields could edge lower and allow XAU/USD to gather bullish momentum.

In the policy statement published after the April 30-May 1 meeting, the Fed said that “in recent months, there has been a lack of further progress toward the Committee’s 2% inflation objective”. On Wednesday, the Fed will publish the minutes of that meeting, and investors will scrutinize policymakers’ discussions on the rate outlook in the face of the first quarter’s strong inflation readings. If the publication shows that some policymakers lean toward a single rate cut in 2024, the USD could gather strength. On the other hand, XAU/USD could extend its uptrend if the report suggests that investors are still in favor of more than one rate reduction.

Gold technical outlook

On the daily chart, the Relative Strength Index (RSI) indicator holds above 60 and Gold remains within the ascending channel coming from mid-April, reflecting the bullish bias. Once Gold confirms $2,400 (static level, psychological level) as support, it could face interim resistance at $2,425 (mid-point of the ascending channel) before $2,430 (static level) and $2,500. 

On the downside, strong support seems to have formed at $2,335-$2,330, where the 20-day Simple Moving Average (SMA) and the lower limit of the ascending channel align. If this support fails, technical sellers could take action. In this scenario, $2,300 (psychological level) and $2,290 (50-day SMA) could be seen as next support levels.