Technical Analysis

GOLD Price Analysis – June 14, 2024

By LonghornFX Technical Analysis
Jun 14, 20243 min

Daily Price Outlook

Gold price (XAU/USD) managed to halt its previous-day downward trend and regained positive momentum around the $2,318 level, reaching an intra-day high of $2,321. However, the uptick in gold prices can be attributed to the weakening US dollar, which retreated from recent highs amidst growing market optimism.

Investors are increasingly pricing in the likelihood of the Federal Reserve initiating a rate-cutting cycle as early as September, driven by signs of subdued inflationary pressures in the US.

Hence, the decline in the US dollar has bolstered gold prices, as lower bond yields and reduced rate hike expectations have diminished the dollar's appeal. In the meantime, the geopolitical tensions in the Middle East and political uncertainties in Europe have further supported gold as a safe-haven asset.

Impact of Fed's Policy Shift and Economic Data on Gold Prices

On the US front, the Federal Reserve's latest projections indicate a shift towards a more cautious approach on interest rates, scaling back expectations from three rate cuts to just one in 2024, which has strengthened the US Dollar and posed challenges for non-yielding assets like Gold.

Although, the softer inflation data released this week, including a Producer Price Index (PPI) increase of 2.2% year-on-year in May (below expectations), and a flat Consumer Price Index (CPI) for the same month, suggest mounting pressure on the Fed to consider rate cuts sooner, possibly as early as September according to the CME Group’s FedWatch Tool.

Additionally, the report on first-time unemployment claims rose more than expected to 242,000, up from 229,000 previously, indicating potential headwinds for the labor market despite other economic indicators showing resilience.

Therefore, the softer inflation data could support Gold prices by increasing the likelihood of earlier rate cuts, which typically weaken the US Dollar and enhance Gold's appeal as an inflation hedge and store of value.

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

GOLD (XAU/USD) - Technical Analysis

Gold prices are holding steady above the $2,300 psychological level, but the technical outlook suggests a potential bearish reversal.

The 4-hour chart reveals the metal is trading slightly above its pivot point at $2,327.33, while the 50-day Exponential Moving Average (EMA) provides near-term support at $2,327.47.

However, the Relative Strength Index (RSI) reading of 50 indicates a neutral sentiment in the market.

This suggests a potential consolidation phase before the next directional move. Traders should monitor key resistance levels at $2,341.65, $2,356.04, and $2,372.84 for potential selling opportunities if the bullish momentum stalls.

On the downside, immediate support rests at $2,299.09, followed by $2,287.04 and $2,271.29. A break below these levels could trigger further selling pressure.

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