GOLD Price Analysis – July 06, 2023

Daily Price Outlook

Gold is trading at 1,926 decreasing by 0.02 percent on Thursday. The price of gold is being influenced by a combination of economic challenges and the worsening relationship between the United States and China.

A report from Reuters revealed that China's service sector experienced slower growth in June than initially anticipated, which has raised concerns about a global economic slowdown.

Moreover, the ongoing trade dispute between the world's two largest economies, the US and China, is dampening investor confidence in riskier assets. This negative sentiment is evident in the somber mood surrounding equity markets and is consequently bolstering the safe-haven appeal of gold.

Additionally, the Federal Reserve's potential tightening of monetary policies could discourage traders from making excessive bullish bets on gold, as it is a non-yielding asset.

Impact on the XAU/USD Exchange Rate Due to Federal Reserve Bets

The release of the Federal Open Market Committee's policy meeting minutes for June revealed that nearly all members were in favor of resuming rate increases due to persistently high inflation. This aligns with market expectations of a 25-basis point lift-off at the upcoming FOMC meeting in July.

Consequently, there was a significant overnight increase in US Treasury bond rates. These developments, combined with a more hawkish stance taken by other major central banks, limited the upward movements in the gold price on Thursday.

Prudence Required as BoE and ECB Display Hawkish Outlooks

The Bank of England (BoE) is expected to tighten its monetary policy by an additional 130 basis points by the end of the year, as indicated by current market pricing. Meanwhile, despite signs of economic slowdown in the Euro Zone, policymakers at the European Central Bank (ECB) anticipate raising borrowing costs in their July and September meetings.

Considering that the price of gold has recently recovered from its lowest level since mid-March, it is advisable for investors to exercise caution and refrain from making positioning decisions until there is significant follow-through buying.

GOLD Price Chart – Source: Tradingview

Gold (XAU/USD) Technical analysis

Gold prices have decided to take a detour from their recent positive streak and are currently back on the decline, hovering around the $1913.15 level. If the price manages to break through this level, it will confirm a return to the bearish channel and could pave the way for further downward movement towards the $1873.50 areas.

While the price continues to sway below the EMA50, supporting the expected bearish trend, it might engage in some sideways movements before finding the necessary momentum to push lower and resume the anticipated bearish wave.

In the bigger picture, we maintain a bearish outlook for the foreseeable future, closely monitoring the price's behavior below the $1929.00 level.

For today's trading adventure, we anticipate the price to wander within a range of $1895.00 as a support level and $1930.00 as a resistance level.

So, the forecasted trend for today remains bearish, and we will be eagerly observing how gold unveils its enchanting moves.