The next area to watch for support activity is around the uptrend line and it was reached today. But if the line fails to hold the next lower price zone is around 2.84 to 2.82, consisting of a crossover of two trendlines and the 50% retracement, respectively. The uptrend line is a relatively short-term line having defined support of the rising trend starting from the April swing low of 1.58. It is used as a guide and is not so reliable without confirming evidence.
Trends Adjust
Given that the angle of ascent has been relatively steep, an adjustment to a lower slope angle would be common and healthy for the trend. Rising trends that start steep will eventually reach a point where demand can no longer support the price momentum and they will adjust to a lower slope. Alternatively, uptrends that start with a low slope angle typically see the angle increase as the trend progresses. Frequently, there are three angles that might be observed in either scenario.
Potentially Bearish Weekly Pattern
What about the weekly time frame? The weekly chart is about to close the week with a bearish shooting star pattern. But before being alarmed notice that three weeks ago ended with a similar candlestick pattern. It was followed by a resumption of the uptrend after a brief drop below the bearish week. That was followed by a three-week continuation of the uptrend until this week’s high of 3.16.
Pennant Pattern Points to 3.78
The breakout of the bull pennant just got started and if it follows through it projects an initial target up to 3.78. That target is above the 2023 high of 3.64. Nonetheless, the main point is that there looks to be more upside in natural gas for the current trend. The target may be reached or not, but it is supportive of a continuation higher above this week’s high once the retracement is complete.
For a look at all of today’s economic events, check out our economic calendar.
U.S. crude oil was on pace Friday to break a three-week losing streak as analysts see a tighter market heading into the third quarter.
Oil prices are up more than 3% this week as summer fuel demand is expected to reduce inventories in the coming weeks, even though the season has gotten off to a tepid start.
Here are today’s energy prices:
West Texas Intermediate July contract: $78.30 per barrel, down 32 cents, or 0.41%. Year to date, U.S. oil is up 9.2%.
Brent August contract: $82.51 per barrel, down 24 cents, or 0.29%. Year to date, the global benchmark is ahead 7%.
RBOB Gasoline July contract: $2.41 per gallon, down 0.09%. Year to date, gasoline is up 14.7%.
Natural Gas July contract: $2.92 per thousand cubic feet, down 1.25%. Year to date, gas has climbed 16%.
Matt Smith, lead oil analyst at Kpler, said the risk is to the upside for oil prices, though gains will be fairly limited.
“You kind of got the bullish argument that we’re going into summer, refinery runs are going to be super strong drawing down inventories,” Smith told CNBC’s “Squawk Box” Friday.
“We could get up to $90, but we’ll come back down again,” Smith said. “We’re not going to $95, by no means are we going to $100 per barrel here.”
Though the market has largely shrugged off geopolitical risk and refocused on fundamentals, RBC Capital Markets cautioned investors to keep a close eye on an increasingly precarious situation on the Israel-Lebanon border.
See Chart…
WTI vs. Brent
“We are closely watching whether Benny Gantz’s departure from the Israeli wartime cabinet will tip the scales in favor of a ground operation aimed at pushing Hezbollah back from the border,” Helima Croft, head of global commodity strategy, told RBC clients in a note Thursday.
Oil remains well below annual highs set in April but has regained ground after a sell-off last week that pushed prices to four-month lows after OPEC+ unveiled plans to increase production in the fourth quarter.
Still, the cartel is keeping all output cuts in place until October, and has rolled two tranches of reductions over until the end of 2025.
“We stay with our tactical long crude recommendation, as our expectations for rising seasonal summer demand and lesser step-up in supply remain intact,” Deutsche Bank analyst Michael Hsueh told clients in a note Thursday.
Deutsche sees the oil supply deficit expanding to nearly 1 million barrels per day in the third quarter, which should support Brent prices rising to the mid-to-upper $80s per-barrel range.
“It would only take a minor overshoot to bring Brent to around USD 90/bbl at some point during the second half,” Hsueh told clients.
Citigroup also sees a tighter market in the third quarter, though it will likely enter a surplus in 2025 on solid production growth and slowing demand, according to the bank.
“When we’re looking at the fundamental picture going into 3Q whether its oil, copper or gold, it looks very solid driven by seasonal increases in demand,” Jeff Currie, an energy analyst at Carlyle, told “Squawk Box” Thursday.
“The supply situation given the recent OPEC meeting points to a tighter 3Q,” Currie said.
Henry Hub spot price: The Henry Hub spot price rose 58 cents from $2.22 per million British thermal units (MMBtu) last Wednesday to $2.80/MMBtu yesterday.
Henry Hub futures price: The price of the July 2024 NYMEX contract increased 28.8 cents, from $2.757/MMBtu last Wednesday to $3.045/MMBtu yesterday. Before Tuesday, when the front-month futures price settled at $3.129/MMBtu, the front-month price had not been above $3.00/MMBtu since January. The price of the 12-month strip averaging July 2024 through June 2025 futures contracts climbed 23.6 cents to $3.459/MMBtu.
Select regional spot prices: Natural gas spot prices rose at most locations this report week (Wednesday, June 5, to Wednesday, June 12), along with the Henry Hub. Price changes ranged from a decrease of 41 cents at FGT Citygate to an increase of 59 cents at the Waha Hub.
Prices in the Northeast increased this report week, despite a decrease in natural gas consumption. At the Algonquin Citygate, which serves Boston-area consumers, the price rose 22 cents from $1.55/MMBtu last Wednesday to $1.77/MMBtu yesterday. The price at Eastern Gas South in southwest Pennsylvania, near Appalachia region production activities, increased 28 cents from $1.37/MMBtu last Wednesday to $1.65/MMBtu yesterday. Natural gas consumption in the Northeast decreased 4% (0.6 billion cubic feet per day [Bcf/d]), according to data from S&P Global Commodity Insights. The decrease in total consumption was led by a decline in natural gas consumption in the electric power sector, which decreased by 9% (0.4 Bcf/d) in the Appalachia region. Temperatures in the Pittsburgh Area averaged 66°F this report week, 1°F lower than last week, resulting in 15 cooling degree days (CDD), 11 fewer CDDs than last week and 14 fewer than normal. The moderate temperatures also resulted in 8 heating degree days (HDD), 1 fewer HDD than normal and 5 fewer than last week.
In the Southeast, at FGT Citygate, which delivers natural gas into Florida, the price fell 41 cents from $4.14/MMBtu last Wednesday to $3.73/MMBtu yesterday. Williams, operator of the Transco pipeline, announced that it has begun returning to service compressor station 60 in Jackson, Louisiana. Since May 6, the station had been undergoing maintenance, and throughput capacity was reduced by approximately 0.8 Bcf/d, restricting eastbound natural gas flows past the compressor station.
Price changes on the West Coast were mixed this report week, rising in Northern California and the Pacific Northwest and falling in Southern California. The price at PG&E Citygate in Northern California rose 19 cents from $1.86/MMBtu last Wednesday to $2.05/MMBtu yesterday. At Northwest Sumas on the Canada-Washington border, the main pricing point for natural gas in the Pacific Northwest, the price rose 14 cents from $1.47/MMBtu last Wednesday to $1.61/MMBtu yesterday. On June 8, Puget Sound Energy, operator of the Jackson Prairie natural gas storage facility in Lewis County, Washington, notified Northwest Pipeline that maintenance had been completed at the facility and deliveries of natural gas into storage could resume. The price at SoCal Citygate in Southern California decreased 5 cents from $1.73/MMBtu last Wednesday to $1.68/MMBtu yesterday. Temperatures in the Riverside Area, east of Los Angeles, averaged 72°F this report week, resulting in 48 CDDs, 2 more CDDs than normal and 17 more than last week.
The price at the Waha Hub in West Texas, which is located near Permian Basin production activities, increased 59 cents from $0.67/MMBtu last Wednesday to $1.26/MMBtu yesterday, mostly in line with the Henry Hub. The Waha Hub discount to the Henry Hub remained relatively flat from the previous report week; Waha traded $1.54 below the Henry Hub price yesterday, compared with last Wednesday when it traded $1.55 below the Henry Hub price. The Waha Hub price has been above $1.00 the last three days, reaching a weekly high of $1.37/MMBtu on Tuesday, the highest price since February.
Daily spot prices by region are available on the EIA website.
International futures prices: International natural gas futures price changes were mixed this report week. According to Bloomberg Finance, L.P., weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased 1 cent to a weekly average of $11.99/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands decreased 19 cents to a weekly average of $10.81/MMBtu. In the same week last year (week ending June 14, 2023), the prices were $9.29/MMBtu in East Asia and $10.40/MMBtu at TTF.
Natural gas plant liquids (NGPL) prices: The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 17 cents/MMBtu, averaging $6.87/MMBtu for the week ending June 12. Ethane prices rose 6% week over week, while weekly average natural gas prices at the Houston Ship Channel increased 17%, narrowing the ethane premium to natural gas by 9%. The ethylene spot price rose 4% week over week, and the ethylene premium to ethane increased 3%. Propane prices increased 6%, while Brent crude oil prices increased 2% week over week. The propane discount to crude oil decreased 4% for the week. Normal butane prices rose 4%, isobutane prices fell 13%, and natural gasoline prices rose 2%.
Supply: According to data from S&P Global Commodity Insights, the average total supply of natural gas rose by 0.1% (0.1 Bcf/d) compared with the previous report week. Dry natural gas production decreased by 0.3% (0.3 Bcf/d) to average 99.3 Bcf/d, and average net imports from Canada increased by 6.8% (0.4 Bcf/d) from last week.
Demand: Total U.S. consumption of natural gas rose by 1.7% (1.1 Bcf/d) compared with the previous report week, according to data from S&P Global Commodity Insights. Natural gas consumed for power generation rose by 4.5% (1.6 Bcf/d) week over week. Industrial sector consumption decreased by 0.7% (0.2 Bcf/d), and residential and commercial sector consumption declined by 3.5% (0.3 Bcf/d). Natural gas exports to Mexico increased 1.4% (0.1 Bcf/d). Natural gas deliveries to U.S. LNG export facilities (LNG pipeline receipts) averaged 12.9 Bcf/d, or 0.3 Bcf/d lower than last week.
Pipeline receipts: Average natural gas deliveries to U.S. LNG export terminals decreased 0.3 Bcf/d from last week to 12.9 Bcf/d, according to data from S&P Global Commodity Insights. Natural gas deliveries to terminals in South Louisiana decreased by 5.4% (0.4 Bcf/d) to 7.6 Bcf/d, while natural gas deliveries to terminals in South Texas increased 3.6% (0.1 Bcf/d) to 4.2 Bcf/d. Natural gas deliveries to terminals outside the Gulf Coast were essentially unchanged at 1.2 Bcf/d.
Vessels departing U.S. ports: Twenty-five LNG vessels (seven from Sabine Pass, five from Corpus Christi, four each from Cameron and Freeport, three from Calcasieu Pass, and one each from Cove Point and Elba Island) with a combined LNG-carrying capacity of 94 Bcf departed the United States between June 6 and June 12, according to shipping data provided by Bloomberg Finance, L.P.
According to Baker Hughes, for the week ending Tuesday, June 4, the natural gas rig count decreased by 2 rigs from a week ago to 98 rigs. The DJ-Niobrara dropped one rig, the Marcellus dropped two rigs, and one rig was added among unidentified producing regions. The number of oil-directed rigs decreased by 4 rigs from a week ago to 492 rigs. The DJ-Niobrara added one rig, the Ardmore Woodford dropped one rig, and four rigs were dropped among unidentified producing regions. The total rig count, which includes 4 miscellaneous rigs, now stands at 594 rigs, the first time the rig count has been under 600 rigs since January 2022.
The Federal Energy Regulatory Commission (FERC) authorized the Mountain Valley Pipeline (MVP) to begin operations. MVP, a 303-mile pipeline, can move up to 2.0 Bcf/d of natural gas from Wetzel County, West Virginia, to an interconnection with Transco’s compressor station 165 in Pittsylvania County, Virginia.
Net injections into storage totaled 74 Bcf for the week ending June 7, compared with the five-year (2019–2023) average net injections of 89 Bcf and last year’s net injections of 90 Bcf during the same week. Working natural gas stocks totaled 2,974 Bcf, which is 573 Bcf (24%) more than the five-year average and 364 Bcf (14%) more than last year at this time.
According to The Desk survey of natural gas analysts, estimates of the weekly net change to working natural gas stocks ranged from net injections of 60 Bcf to 83 Bcf, with a median estimate of 72 Bcf.
The average rate of injections into storage is 8% lower than the five-year average so far in the refill season (April through October). If the rate of injections into storage matched the five-year average of 9.0 Bcf/d for the remainder of the refill season, the total inventory would be 4,285 Bcf on October 31, which is 573 Bcf higher than the five-year average of 3,712 Bcf for that time of year.
*Avg. of NGI’s reported prices for: Malin, PG&E Citygate, and Southern California Border Avg.
Data source: NGI’s Daily Gas Price Index
U.S. natural gas supply – Gas Week: (6/6/24 – 6/12/24)
Average daily values (billion cubic feet)
this week
last week
last year
Marketed production
112.5
112.8
116.1
Dry production
99.3
99.6
102.7
Net Canada imports
5.8
5.4
5.1
LNG pipeline deliveries
0.1
0.1
0.1
Total supply
105.2
105.1
107.8
Data source: S&P Global Commodity Insights
Note: This table reflects any data revisions that may have occurred since the previous week’s posting. Liquefied natural gas (LNG) pipeline deliveries represent natural gas sendout from LNG import terminals.
U.S. natural gas consumption – Gas Week: (6/6/24 – 6/12/24)
Average daily values (billion cubic feet)
this week
last week
last year
U.S. consumption
68.6
67.5
68.3
Power
37.8
36.1
37.0
Industrial
21.6
21.8
21.8
Residential/commercial
9.2
9.6
9.6
Mexico exports
7.0
6.9
6.7
Pipeline fuel use/losses
8.6
8.5
8.8
LNG pipeline receipts
12.9
13.2
11.6
Total demand
97.1
96.1
95.4
Data source: S&P Global Commodity Insights
Note: This table reflects any data revisions that may have occurred since the previous week’s posting. Liquefied natural gas (LNG) pipeline receipts represent pipeline deliveries to LNG export terminals.
Rigs
Tue, June 04, 2024
Change from
last week
last year
Oil rigs
492
-0.8%
-11.5%
Natural gas rigs
98
-2.0%
-27.4%
Note: Excludes any miscellaneous
rigs
Rig numbers by type
Tue, June 04, 2024
Change from
last week
last year
Vertical
20
0.0%
5.3%
Horizontal
531
-0.9%
-15.0%
Directional
43
-2.3%
-15.7%
Data source: Baker Hughes Company
Working gas in underground storage
Stocks billion cubic feet (Bcf)
Region
2024-06-07
2024-05-31
change
East
603
575
28
Midwest
712
688 R
24
Mountain
224
218
6
Pacific
276
273
3
South Central
1,159
1,146
13
Total
2,974
2,900 R
74
R=Revised.
Working gas stocks were revised to reflect resubmissions of data during the five-week period from May 3, 2024, to May 31, 2024, increasing stocks by 6 Bcf to 9 Bcf for each week during this period. The reported revisions caused the stocks for May 31, 2024, to change from 2,893 Bcf to 2,900 Bcf, and working gas stocks for the week ending May 24, 2024, changed from 2,795 Bcf to 2,804 Bcf. As a result, the implied net change between the weeks ending May 31, 2024, and May 24, 2024, changed from 98 Bcf to 96 Bcf. More information about the revised working gas levels can be found at: https://ir.eia.gov/ngs/ngshistory.xls.
Softer-than-anticipated US Producer Price Index figures temporarily boosted the mood.
Wall Street’s poor performance reflects a sour mood, backing demand for the US Dollar.
XAU/USD turned bearish and aims to pierce the weekly low at $2,286.69.
After a volatile Wednesday, the US Dollar recovered the ground lost following United States (US) first-tier events, pushing higher even against the safe-haven Gold in a risk-averse environment. XAU/USD trades below $2,300 a troy ounce, trimming weekly gains.
The US Dollar turned lower mid-European morning following the release of encouraging US inflation-related data. The US Bureau of Labor Statistics (BLS) reported that the Producer Price Index (PPI) rose 2.2% YoY in May, easing from the 2.3% increase posted in April and below expectations for a 2.5% advance. On a monthly basis, the PPI declined by 0.2%.
The optimism was short-lived as US indexes turned sharply lower after the opening, pushing the Greenback higher across financial boards. At the time being, only the Nasdaq Composite trades in the green, up a modest 0.29%. The Dow Jones Industrial Average is the worst performer, down 225 points.
The upcoming Asian session will bring the Bank of Japan’s (BoJ) monetary policy decision. Market participants speculate the central bank will probably leave interest rates unchanged, although policymakers may also announce a reduction in bond purchases.
XAU/USD short-term technical outlook
The daily chart for XAU/USD shows that the risk of a bearish breakout has increased. The pair is trading below a firmly bearish 20 Simple Moving Average (SMA), while technical indicators resumed their slides within negative levels, in line with another leg lower. The 100 and 200 SMAs keep heading higher well below the current level, although they remain too far to become relevant. The weekly low at $2,286.69 is the immediate support level.
In the near term, and according to the 4-hour chart, the bearish case is even stronger. XAU/USD accelerated south after sliding below a now flat 20 SMA. Furthermore, the 100 SMA is crossing below the 200 SMA, both far above the shorter one. Finally, technical indicators crossed their midlines into negative territory, and maintain firmly bearish slopes, reflecting persistent selling interest.
An uptrend line marks dynamic support for the current advance that began from the April 25 swing low. Also, the downtrend line identifies a price area for potential support. If the uptrend line is broken the downtrend line is the next line to watch for possible support. The two lines cross at a price of 2.84, marking another price to watch. That price area can be watched along with this week’s low of 2.86.
A little lower is the important 20-Day MA at 2.75. Notice that the 20-Day line has now converged with the top boundary line of the pennant pattern. Each is marking a similar price support area. It is also interesting that the day the 20-Day MA hit the bottom boundary line of the pennant on June 6, was the day of the pennant breakout. Although it closed weak, the next day’s upside continuation made up for it.
Trend Anticipated to Resume Following Minor Retracement
Given the strong bullish behavior of natural gas during the current ascent, higher targets remain in sight. At the same time, the relative strength index momentum oscillator (RSI) is beginning to show signs of a bearish divergence. It is still early though but should be watched as the trend progresses.
Breakout Above 3.09 Shows Strength
Given today’s pullback, a rally above the day’s high of 3.09 provides a sign of strength. The next higher target zone, above the nearby 3.18 to 3.20 Fibonacci confluence zone, is the 3.39 swing high from early-January. Nevertheless, a decisive breakout above this week’s high of 3.16 has a good chance of exceeding that swing high eventually, if not on the first approach.
For a look at all of today’s economic events, check out our economic calendar.
Softer-than-anticipated US Producer Price Index figures temporarily boosted the mood.
Wall Street’s poor performance reflects a sour mood, backing demand for the US Dollar.
XAU/USD turned bearish and aims to pierce the weekly low at $2,286.69.
After a volatile Wednesday, the US Dollar recovered the ground lost following United States (US) first-tier events, pushing higher even against the safe-haven Gold in a risk-averse environment. XAU/USD trades below $2,300 a troy ounce, trimming weekly gains.
The US Dollar turned lower mid-European morning following the release of encouraging US inflation-related data. The US Bureau of Labor Statistics (BLS) reported that the Producer Price Index (PPI) rose 2.2% YoY in May, easing from the 2.3% increase posted in April and below expectations for a 2.5% advance. On a monthly basis, the PPI declined by 0.2%.
The optimism was short-lived as US indexes turned sharply lower after the opening, pushing the Greenback higher across financial boards. At the time being, only the Nasdaq Composite trades in the green, up a modest 0.29%. The Dow Jones Industrial Average is the worst performer, down 225 points.
The upcoming Asian session will bring the Bank of Japan’s (BoJ) monetary policy decision. Market participants speculate the central bank will probably leave interest rates unchanged, although policymakers may also announce a reduction in bond purchases.
XAU/USD short-term technical outlook
The daily chart for XAU/USD shows that the risk of a bearish breakout has increased. The pair is trading below a firmly bearish 20 Simple Moving Average (SMA), while technical indicators resumed their slides within negative levels, in line with another leg lower. The 100 and 200 SMAs keep heading higher well below the current level, although they remain too far to become relevant. The weekly low at $2,286.69 is the immediate support level.
In the near term, and according to the 4-hour chart, the bearish case is even stronger. XAU/USD accelerated south after sliding below a now flat 20 SMA. Furthermore, the 100 SMA is crossing below the 200 SMA, both far above the shorter one. Finally, technical indicators crossed their midlines into negative territory, and maintain firmly bearish slopes, reflecting persistent selling interest.
Support levels: 2,286.70 2,271.90 2,258.30
Resistance levels: 2,308.80 2,321.55 2,333.10
XAU/USD Current price: $2,297.49
Softer-than-anticipated US Producer Price Index figures temporarily boosted the mood.
Wall Street’s poor performance reflects a sour mood, backing demand for the US Dollar.
XAU/USD turned bearish and aims to pierce the weekly low at $2,286.69.
After a volatile Wednesday, the US Dollar recovered the ground lost following United States (US) first-tier events, pushing higher even against the safe-haven Gold in a risk-averse environment. XAU/USD trades below $2,300 a troy ounce, trimming weekly gains.
The US Dollar turned lower mid-European morning following the release of encouraging US inflation-related data. The US Bureau of Labor Statistics (BLS) reported that the Producer Price Index (PPI) rose 2.2% YoY in May, easing from the 2.3% increase posted in April and below expectations for a 2.5% advance. On a monthly basis, the PPI declined by 0.2%.
The optimism was short-lived as US indexes turned sharply lower after the opening, pushing the Greenback higher across financial boards. At the time being, only the Nasdaq Composite trades in the green, up a modest 0.29%. The Dow Jones Industrial Average is the worst performer, down 225 points.
The upcoming Asian session will bring the Bank of Japan’s (BoJ) monetary policy decision. Market participants speculate the central bank will probably leave interest rates unchanged, although policymakers may also announce a reduction in bond purchases.
XAU/USD short-term technical outlook
The daily chart for XAU/USD shows that the risk of a bearish breakout has increased. The pair is trading below a firmly bearish 20 Simple Moving Average (SMA), while technical indicators resumed their slides within negative levels, in line with another leg lower. The 100 and 200 SMAs keep heading higher well below the current level, although they remain too far to become relevant. The weekly low at $2,286.69 is the immediate support level.
In the near term, and according to the 4-hour chart, the bearish case is even stronger. XAU/USD accelerated south after sliding below a now flat 20 SMA. Furthermore, the 100 SMA is crossing below the 200 SMA, both far above the shorter one. Finally, technical indicators crossed their midlines into negative territory, and maintain firmly bearish slopes, reflecting persistent selling interest.
The Federal Reserve’s decision to maintain the federal funds rate target range at 5.25%-5.50%, as anticipated by the market, wasn’t the main story. Instead, it was the accompanying policy statement and press conference by Chair Jerome Powell that dampened expectations for a swift easing of monetary policy. Policymakers prioritized combating inflation, despite recent data showing some easing in consumer prices. This hawkish tilt by the Fed strengthened the US dollar, making dollar-denominated silver more expensive for foreign investors and exerting downward pressure on prices.
Silver Waits for Rate Cut Clarity
The silver market, which typically thrives on expectations of lower interest rates, now faces uncertainty. While recent inflation data offered a positive sign, the delay in rate cuts throws a curveball at the bullish narrative. Lower borrowing costs tend to make non-interest-bearing assets like silver more attractive, but the timing of those cuts remains unclear. This lack of clarity from the Fed is likely to result in volatile silver prices in the near term.
Economic Data and Fed Guidance Key
Traders should pay close attention to upcoming economic data releases and the Fed’s pronouncements for clues on the central bank’s next move. Initial jobless claims data and the producer price index for May, both scheduled for release today, could offer insights into inflation pressures. Additionally, any indications from the Fed about the timing of the single rate cut it now forecasts for 2024 will be crucial for gauging silver’s future direction.
Choppy Trading Ahead for Silver
With the Fed adopting a wait-and-see approach, silver’s short-term outlook is uncertain. While the recent inflation slowdown may provide some support, the delay in rate cuts could limit any significant upward momentum. Investors should be prepared for choppy price action until the Fed offers a clearer timeline for its monetary policy changes.
Gold price turns south toward $2,300 early Thursday, snapping a three-day rebound.
The US Dollar looks to extend post-US CPI data recovery, courtesy of the Fed’s hawkish hold.
Gold sellers remain poised to test the key $2,277 support, as the daily RSI stays bearish.
Gold price is trading in the red for the first time this week, looking to retest the $2,300 level early Thursday. Gold sellers fight back control following the hawkish US Federal Reserve (Fed) interest rate decision but stay cautious ahead of the US Producer Price Index (PPI) inflation data due later on Thursday.
Gold price enjoyed a good two-way business on Fed day
Gold price enjoyed good two-way price action on Wednesday, starting off the day on a cautious footing, consolidating Tuesday’s rebound in the lead-up to the US Consumer Price Index (CPI) data release.
Gold buyers received a fresh boost on a much softer-than-expected US CPI report, which bolstered expectations of Fed interest rate cuts this year. Increased dovish Fed bets smashed the US Dollar alongside the US Treasury bond yields across the curve, driving Gold price closer to the $2,350 barrier.
The headline CPI was flat over the month in May, below expectations for a 0.1% gain. Core CPI rose 0.2%, also below estimates for a 0.3% increase. The annual figures also came in softer than the market consensus.
However, the tide turned against Gold price, as sellers jumped back into the game on the Fed policy announcements. Gold price reversed nearly $15 from multi-day highs to settle with modest gains near $2,325 on Wednesday.
Fed held policy rates steady in the range of 5.25%-5.50%, following the June policy meeting. The revised Summary of Economic Projections, the so-called dot-plot, indicated the policymakers expect to cut rates only once in 2024, against a projection of three rate cuts in the March forecasts and down from two rate cuts widely anticipated.
Fed Chair Jerome Powell also delivered hawkish comments during his post-policy meeting press conference, noting that “more recent readings on inflation have shown easing. So far this year, we have not got greater confidence on inflation in order to cut.”
“Will need to see more good data to bolster confidence on inflation,” Powell added.
With the ‘Super Wednesday’ now out of the way, attention turns toward a fresh batch of top-tier US economic data, including the PPI report, which could raise doubts over the Fed’s hawkish outlook on interest rates.
Gold price will likely remain at the mercy of risk trends and the US Dollar price action, in the aftermath of the key US events.
Gold price technical analysis: Daily chart
As observed on the daily chart, the Gold price defied bearish pressures on Wednesday but the downside bias remains intact going forward, as the 14-day Relative Strength Index (RSI) holds well below the 50 level and a Bear Cross remains in the making.
The 21-day Simple Moving Average (SMA) is on the verge of crossing the 50-day SMA from above, which if happens will validate the bearish crossover, opening the door for a renewed downtrend in Gold price.
The immediate support is now seen at the $2,300 threshold, below which the May 3 low of $2,277 will be threatened. A sustained break below the latter is critical to boosting sellers toward the $2,250 psychological barrier.
Alternatively, the recovery in Gold price will need acceptance above key confluence support-turned-resistance near $2,350, where the 21-day and 50-day SMAs coincide.
Gold buyers will then flex their muscles toward the May 24 high of $2,364 on their way to the June 7 high of $2,388.
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.
The US Consumer Price Index eased by more than anticipated in May.
Eyes turn to the Federal Reserve and Chairman Jerome Powell.
XAU/USD advances modestly in a risk-on scenario, support at $2,330.
Spot Gold peaked at $2,341.51 on Wednesday, as the US Dollar fell following the release of the United States (US) Consumer Price Index (CPI). Markets turned wildly optimistic after the Bureau of Labor Statistics (BLS) reported that inflation rose less than anticipated in May, easing from April’s levels. The CPI rose 3.3% YoY and held unchanged on a monthly basis. Furthermore, the annual core CPI rose 3.4%, while the monthly figure was up by 0.2%, below expected and previous figures.
XAU/USD retreated from such a high after Wall Street’s opening as demand for high-yielding assets accelerated, undermining the positive momentum of the bright metal, although it holds to most of its intraday gains above the $2,330 mark.
The focus now shifts to the Federal Reserve(Fed). The Federal Open Market Committee (FOMC) is about to end its two-day meeting and announce its decision on monetary policy. Financial markets widely anticipate policymakers will leave the benchmark rate unchanged in a floating range between 5.25% and 5.50%. Following the release of US inflation-related figures, markets rushed to price in a 63% chance of a rate cut by September, up from roughly 47% before the event. Chairman Jerome Powell will conduct a press conference following the announcement and may shed light on whatever policymakers plan for the near future of monetary policy.
XAU/USD short-term technical outlook
The daily chart for the XAU/USD pair is up for a third consecutive session, although gains are modest. The positive momentum is limited, as technical indicators advance, although within negative levels. At the same time, the 20 Simple Moving Average (SMA) maintains a modest downward slope above the current level, providing dynamic resistance at around $2,353.25. Finally, the 100 and 200 SMAs keep heading north well below the current level, limiting the downside.
In the near term, and according to the 4-hour chart, the risk for XAU/USD skews to the upside. The pair ran past its 20 SMA, which is currently losing its bearish slope. It remains below the 100 and 200 SMAs, both at around $2,345. Finally, technical indicators remain within positive levels but lost their positive momentum ahead of the Fed’s announcement.
Support levels: 2,328.90 2,313.30 2,300.00
Resistance levels: 2,345.00 2,353.25 2,368.70
XAU/USD Current price: $2,337.15
The US Consumer Price Index eased by more than anticipated in May.
Eyes turn to the Federal Reserve and Chairman Jerome Powell.
XAU/USD advances modestly in a risk-on scenario, support at $2,330.
Spot Gold peaked at $2,341.51 on Wednesday, as the US Dollar fell following the release of the United States (US) Consumer Price Index (CPI). Markets turned wildly optimistic after the Bureau of Labor Statistics (BLS) reported that inflation rose less than anticipated in May, easing from April’s levels. The CPI rose 3.3% YoY and held unchanged on a monthly basis. Furthermore, the annual core CPI rose 3.4%, while the monthly figure was up by 0.2%, below expected and previous figures.
XAU/USD retreated from such a high after Wall Street’s opening as demand for high-yielding assets accelerated, undermining the positive momentum of the bright metal, although it holds to most of its intraday gains above the $2,330 mark.
The focus now shifts to the Federal Reserve(Fed). The Federal Open Market Committee (FOMC) is about to end its two-day meeting and announce its decision on monetary policy. Financial markets widely anticipate policymakers will leave the benchmark rate unchanged in a floating range between 5.25% and 5.50%. Following the release of US inflation-related figures, markets rushed to price in a 63% chance of a rate cut by September, up from roughly 47% before the event. Chairman Jerome Powell will conduct a press conference following the announcement and may shed light on whatever policymakers plan for the near future of monetary policy.
XAU/USD short-term technical outlook
The daily chart for the XAU/USD pair is up for a third consecutive session, although gains are modest. The positive momentum is limited, as technical indicators advance, although within negative levels. At the same time, the 20 Simple Moving Average (SMA) maintains a modest downward slope above the current level, providing dynamic resistance at around $2,353.25. Finally, the 100 and 200 SMAs keep heading north well below the current level, limiting the downside.
In the near term, and according to the 4-hour chart, the risk for XAU/USD skews to the upside. The pair ran past its 20 SMA, which is currently losing its bearish slope. It remains below the 100 and 200 SMAs, both at around $2,345. Finally, technical indicators remain within positive levels but lost their positive momentum ahead of the Fed’s announcement.
The US Consumer Price Index eased by more than anticipated in May.
Eyes turn to the Federal Reserve and Chairman Jerome Powell.
XAU/USD advances modestly in a risk-on scenario, support at $2,330.
Spot Gold peaked at $2,341.51 on Wednesday, as the US Dollar fell following the release of the United States (US) Consumer Price Index (CPI). Markets turned wildly optimistic after the Bureau of Labor Statistics (BLS) reported that inflation rose less than anticipated in May, easing from April’s levels. The CPI rose 3.3% YoY and held unchanged on a monthly basis. Furthermore, the annual core CPI rose 3.4%, while the monthly figure was up by 0.2%, below expected and previous figures.
XAU/USD retreated from such a high after Wall Street’s opening as demand for high-yielding assets accelerated, undermining the positive momentum of the bright metal, although it holds to most of its intraday gains above the $2,330 mark.
The focus now shifts to the Federal Reserve(Fed). The Federal Open Market Committee (FOMC) is about to end its two-day meeting and announce its decision on monetary policy. Financial markets widely anticipate policymakers will leave the benchmark rate unchanged in a floating range between 5.25% and 5.50%. Following the release of US inflation-related figures, markets rushed to price in a 63% chance of a rate cut by September, up from roughly 47% before the event. Chairman Jerome Powell will conduct a press conference following the announcement and may shed light on whatever policymakers plan for the near future of monetary policy.
XAU/USD short-term technical outlook
The daily chart for the XAU/USD pair is up for a third consecutive session, although gains are modest. The positive momentum is limited, as technical indicators advance, although within negative levels. At the same time, the 20 Simple Moving Average (SMA) maintains a modest downward slope above the current level, providing dynamic resistance at around $2,353.25. Finally, the 100 and 200 SMAs keep heading north well below the current level, limiting the downside.
In the near term, and according to the 4-hour chart, the risk for XAU/USD skews to the upside. The pair ran past its 20 SMA, which is currently losing its bearish slope. It remains below the 100 and 200 SMAs, both at around $2,345. Finally, technical indicators remain within positive levels but lost their positive momentum ahead of the Fed’s announcement.
