June 13, 2024

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Gold Price Forecast: XAU/USD maintains its bid tone around $1,925 area, lacks follow-through

3 min read
  • Gold price attracts some buyers for the second successive day and draws support from a combination of factors.
  • Worries about a global economic downturn and the worsening US-China relations, benefit the safe-haven metal.
  • Retreating US bond yields prompts some US Dollar profit-taking and remains supportive of the positive move.

Gold price gains some positive traction for the second successive day and recovers further from over a one-week low, around the $1,915 region touched on Wednesday. The XAU/USD maintains its bid through the early European session and currently trades around the $1,925-$1,926 area, up over 0.30% for the day.

Against the backdrop of concerns about the worsening economic conditions in China, a downward revision of Japan’s second-quarter GDP growth fuels worries about a deeper global downturn. Apart from this, the worsening US-China relations – the world’s two largest economies – drive some haven flows towards the Gold price. The Wall Street Journal reported on Wednesday that China has ordered officials at central government agencies not to bring iPhones into the office or use them for work.

This comes after US Secretary of Commerce Gina Raimondo’s comments earlier this week that she doesn’t expect any changes to the US tariffs imposed on China by the Trump administration until the ongoing review by the US Treasury is complete. The developments continue to weigh on investors’ sentiment, which is evident from the prevalent cautious mood around the equity markets. Apart from this, a modest US Dollar (USD) weakness is seen lending additional support to the Gold price.

Reviving safe-haven demand leads to a further decline in the US Treasury bond yields and prompts traders to lighten their USD bullish bets, especially after the recent rally to the highest level since March 9. A weaker Greenback tends to underpin demand for the US Dollar-denominated commodities, including the Gold price. That said, growing acceptance that the Federal Reserve (Fed) will stick to its hawkish stance and keep interest rates higher for longer might cap the upside for the XAU/USD.

The incoming stronger-than-expected macro data from the United States (US), including the ISM Services PMI on Wednesday and Weekly Jobless Claims on Thursday, points to a resilient economy. The narrative, meanwhile, supports prospects for further policy tightening by the Fed, which, in turn, should limit any meaningful downside for the US bond yields and the USD. This, in turn, might hold back traders from placing aggressive bullish bets around the non-yielding Gold price.

Market participants might also prefer to wait on the sidelines ahead of China inflation data and the G20 leaders summit over the weekend. Hence, some follow-through buying is needed to confirm that the recent pullback from a one-month peak, around the $1,953 area touched last Friday, has run its course. Bears, on the other hand, might still wait for a sustained break and acceptance below the 200-day Simple Moving Average (SMA) before placing fresh bets around the Gold price.

Nevertheless, the XAU/USD remains on track to register losses for the first time in the previous three weeks. In the absence of any relevant market-moving economic data from the US, the US bond yields will continue to play a key role in influencing the USD price dynamics. Apart from this, the broader risk sentiment will drive demand for safe-haven assets and further contribute to producing short-term trading opportunities around the Gold price on the last day of the week.

Technical levels to watch

XAU/USD

OVERVIEW
Today last price1925.47
Today Daily Change5.75
Today Daily Change %0.30
Today daily open1919.72
TRENDS
Daily SMA201915.73
Daily SMA501932.23
Daily SMA1001951.29
Daily SMA2001918.3
LEVELS
Previous Daily High1923.63
Previous Daily Low1916.29
Previous Weekly High1953.01
Previous Weekly Low1912.84
Previous Monthly High1966.08
Previous Monthly Low1884.85
Daily Fibonacci 38.2%1920.83
Daily Fibonacci 61.8%1919.09
Daily Pivot Point S11916.13
Daily Pivot Point S21912.54
Daily Pivot Point S31908.79
Daily Pivot Point R11923.47
Daily Pivot Point R21927.22
Daily Pivot Point R31930.81

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