Gold Finds Support, Further Decline Likely
05 Jun 2023
In the immediate term, gold finds support above $1,940, and a further decline appears likely.
FUNDAMENTAL OVERVIEW
The price of gold has temporarily found support around $1,943.00, but further declines appear more likely. After moving in a mean-reversion fashion to a price near the 200-period EMA at $1,977.32, the gold price saw a sharp sell-off.
In the early European session, the price of gold (XAU/USD) discovered an intermediate support area of around $1,943.00. Although the precious metals downward have temporarily intervened, more losses are still projected as the Federal Reserve (Fed) is anticipated to hike interest rates further to maintain pressure on obstinate US inflation.
On Monday, the Federal Reserve’s decision to keep interest rates unchanged was uncertain, which led to a modest decline in gold prices. Meanwhile, fears about slowing economic growth drove down copper prices.
The U.S. nonfarm payrolls report for May came in considerably stronger than anticipated, which suggested a hawkish view for the Fed as it works to lower high inflation. The yellow metal dropped on Friday as a result.
By 21:14 ET (01:14 GMT), spot gold was down marginally at $1,947.89 per ounce, while gold futures were down 0.3% at $1.963.90. Nearly two-month lows were being reached by both instruments in trading.
Fed Fund futures prices indicate that the market expects the Fed to hold interest rates constant in June by almost 80%. However, the bank may possibly raise rates further given that recent inflation and labor statistics exceeded market forecasts.
This year, while the global economy continues to deteriorate under the burden of high-interest rates, gold is still anticipated to profit from rising safe-haven demand.
GOLD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview
Gold is trading in the down channel.
Gold is currently trading below all SMA.
RSI is in the selling zone which suggests bearishness and Stochastic suggests a downtrend.
Gold resistance is at 1948.96 & its immediate support level is 1938.37
HOW TO GOLD
Gold is currently trading in a downward channel and created a bearish engulfing pattern during a retreat. As of today, the price of gold has broken through the previous day’s low and is currently trading at a key support level; if this level is broken, additional declines are to be expected.