GOLD Price Analysis – July 05, 2023

Daily Price Outlook

Gold is trading at 1,933 increasing by 0.01 percent on Wednesday. The gold price falls throughout the Asian session on Wednesday amid the hawkish Central Bank and modest US dollar strength.

The focus remains on the minutes of the June FOMC meeting.

After its policy meeting on June 13–14, the Fed stated that an interest rate increase of 50 basis points (bps) was necessary before the year was over. However, the incoming US macroeconomic data sparked concerns about the Fed's ability to continue tightening its monetary policy.

In reality, the US Bureau of Economic Analysis announced last Friday that despite a significant slowdown in consumer spending in May, inflation pressures somewhat lessened.

Therefore, the minutes will be carefully examined for hints regarding the Fed's potential rate-hike path, which will in turn be crucial in deciding the next leg of the non-yielding gold price's directional movement.

The FOMC meeting minutes are now eagerly anticipated by traders before they make new directional bets.

While waiting for the next Federal Open Market Committee (FOMC) policy meeting on July 25–26, there is rising support for a 25–bps lift-off, which supports higher US Treasury bond rates and supports the US Dollar (USD).

This is then considered to be a major factor affecting the price of gold expressed in US dollars. Additionally, the hawkish stance of other significant central banks limits increases for the XAU/USD. Worries over a worldwide economic slowdown, particularly in China, have dampened the downside, which typically benefits the safe-haven precious metal.

The XAU/USD is hampered by hawkish central banks and a little increase in the US Dollar.

Losses for XAU/USD might be limited by deteriorating US-China relations.

Two metals that are frequently utilized in semiconductors, electric cars, and high-tech sectors were subject to export restrictions by China. The change, which is scheduled to go into force on August 1, would further disrupt the world's supply.

However, the unexpected declaration may intensify a trade spat with the US, discouraging traders from making aggressive wagers against the price of gold amid its safe-haven status.

GOLD Price Chart – Source: Tradingview

Gold (XAU/USD) Technical analysis

Gold prices are currently exhibiting fluctuations around the $1929.00 level and remain consolidated below it. Notably, the stochastic indicator shows a negative overlap, suggesting a potential catalyst for the price to resume the correctional bearish trend.

In this scenario, the initial targets for the downward movement begin at $1913.15, with a potential extension to $1873.50 following a break below the previous level.

Maintaining a position below $1929.00 is of significant importance to sustain the expected decline. However, a breach above this level could pave the way for a new upward movement, with a target of testing $1945.20 before any renewed negative attempts.

For today's trading, the expected range is anticipated to be between the support level of $1900.00 and the resistance level of $1935.00.

Based on the analysis, the expected trend for today is bearish.