Technical Analysis

GOLD Price Analysis – July 02, 2024

By LonghornFX Technical Analysis
Jul 2, 20243 min

Daily Price Outlook

Gold prices (XAU/USD) continue to face downward pressure, hovering around $2,328.65 per ounce with an intraday low touching $2,324.98. This decline can be attributed to several factors, including the renewed strength of the US dollar, which has gained traction despite growing speculation about a potential Federal Reserve rate cut in September.

Meanwhile, the ongoing risk-on sentiment in the market, bolstered by increasing expectations of Donald Trump's re-election later this year, has further weighed on gold, traditionally considered a safe-haven asset.

Looking forward, traders seem cautious to place any strong position ahead of Federal Reserve Chair Jerome Powell's upcoming speech on Tuesday and the release of the FOMC meeting minutes scheduled for Wednesday.

However, the highly anticipated US monthly employment report, Nonfarm Payrolls (NFP), set for release on Friday, is poised to have a impact on market sentiment and expectations regarding future monetary policy decisions by the Fed.

Economic Data and Strong US Dollar Pressure Gold Prices Amid Fed Rate Cut Speculations

Despite the upbeat market sentiment and increasing expectations of a September rate cut by the Federal Reserve, the US dollar continues to strengthen as investors await clearer signals regarding the Fed's monetary policy stance. However, these gains in the dollar could be temporary amid growing consensus that the Fed will start rate cuts in September.

Market expectations were bolstered following Monday's release of the US ISM PMI data, which showed that the manufacturing sector contracted for the third consecutive month in June, coupled with a decline in factory input prices to a six-month low.

On the economic data front, the Institute for Supply Management reported that its Manufacturing PMI remained in contraction for the second consecutive month, slipping from 48.7 to 48.5 in June, which was below expectations.

The Employment Index also declined to 49.3 from May's 51.1, indicating a slowdown in hiring within the sector. Additionally, the Prices Paid Index, a gauge of inflation, dropped to 52.1 from 57, reflecting easing price pressures.

These figures followed the US PCE Price Index report, which revealed that May's inflation rate hit its lowest level in over three years, reinforcing expectations for potential Fed interest rate cuts.

Therefore, the economic data and strengthening US dollar continue to pressure gold prices, with expectations of potential Fed rate cuts providing limited support amid the ongoing market uncertainty.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart - Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

Gold (XAU/USD) is currently trading at $2,330.695, down 0.06% for the day. On the 4-hour chart, the pivot point is set at $2,344.00, serving as a crucial level for traders to monitor.

Immediate resistance is found at $2,347.54, followed by higher resistance levels at $2,355.68 and $2,368.78. On the downside, immediate support is located at $2,318.85, with further support at $2,307.01 and $2,294.45.

Technical indicators show a mixed outlook. The Relative Strength Index (RSI) stands at 55, indicating neutral momentum. The 50-day Exponential Moving Average (EMA) is positioned at $2,325.67, suggesting a potential support level just below the current price level.

The market sentiment for gold appears cautious, with traders awaiting further economic data and market cues. The recent price movement suggests that the precious metal is struggling to find a clear direction.

A break above the immediate resistance of $2,347.54 could signal a short-term bullish trend, while a fall below the immediate support of $2,318.85 may lead to further declines.

In conclusion, traders might consider buying gold above $2,318 with a take profit target at $2,344 and a stop loss at $2,306.

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