June 13, 2024

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Gold Technical Analysis: Prices Stable Ahead of Events

3 min read
  • At the beginning of this important trading week, gold futures fell below $ 2,000, despite the exacerbation of the US banking crisis over the weekend.
  • However, the yellow metal failed to take advantage of the turmoil in the financial sector.
  • Mixed economic data and a strong US dollar affected gold’s performance.
  • XAU/USD gold prices fell to the level of 1977 dollars an ounce, before settling around the level of 1985 dollars an ounce, at the time of writing the analysis.
  • All in all, the price of gold is retreating from a weekly loss of around 0.3%, trimming its annual gains to less than 9%.

Gold’s sister commodity silver prices fluctuated, and June silver futures contract was unchanged at $25.22 an ounce on Monday. The price of the white metal rose as much as 89 cents before erasing all of its gains. Silver prices are still up more than 4% over the year. US officials tried to calm financial markets on Monday after it was revealed that JPMorgan Chase will acquire First Republic assets after it became the second largest failure in the country’s history. First Republic also became the third bank failure since March.

Economic data was mixed, with the S&P Global Manufacturing Purchasing Managers’ Index (PMI) coming in at a lower-than-expected 50.2 in April, up from 49.2 in March – and any reading above the 50 level indicates growth. The ISM manufacturing PMI improved to 47.1, but remained stuck in contraction territory for the sixth consecutive month. The ISM reading saw employment rise, new orders jump, and prices rise.

Construction spending rose 0.3% from -0.3% in February. This was also above the market estimate of 0.1%.

The US Treasury market was mostly higher across the board, with the benchmark 10-year yield rising 10.5 basis points to 3.557%. The one-month note rose 5.1 basis points to 4.366%, while the 30-year note rose 12.6 basis points to 3.803%.

All eyes will be on the Federal Open Market Policy Committee (FOMC) meeting of the Federal Reserve on Wednesday. Policymakers are widely expected to raise US interest rates by 25 basis points to above 5%, despite the chaos in the financial sector.

The gold market in general is sensitive to movements in interest rates because they can affect the opportunity cost of holding non-yielding bullion.

Meanwhile, investors turned to the dollar, as the US Dollar Index (DXY) rose 0.48% to 102.15, from an opening of 101.66. The overall index, which measures the performance of the greenback against a basket of currencies, is coming off a weekly gain of about 0.3%, but is still down by 1.3% over the course of 2023. A stronger gain is bad for commodities priced in US dollars because it makes them more expensive for foreign investors to buy.

In other metals markets, copper futures rose to $3.9225 a pound. Platinum futures fell to $1,063.30 an ounce. Palladium futures fell to $1,445.50 an ounce.

XAU/USD gold price forecast today:

According to the performance on the daily chart below, the XAU/USD gold price is in a neutral position with a slight bearish tendency supported by temporarily abandoning the $2000 psychological resistance and returning to it. This will support the bulls to return to breach stronger ascending levels, and the closest to them after that, $2025 and $2040, respectively. The broader trend for gold is bullish. Breaking the $1965 support level will support the bears, and at the same time, investors may then consider buying levels, as global geopolitical tensions and the future of reducing tightening of global central bank policies are still a good environment for the XAU/USD gold price recovery in the future.

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