Technical Analysis

GOLD Price Analysis – June 19, 2024

By LonghornFX Technical Analysis
Jun 19, 20243 min

Daily Price Outlook

Despite the bearish US dollar, the price of Gold (XAU/USD) failed to stop its downward trend and remains under pressure around the $2,328 level and hitting an intraday low of $2,335. However, the decline can be attributed to the upbeat market sentiment, which undermined safe-haven assets like Gold. On the flip side, the US dollar losing its traction on the back of the Fed's mixed stance on interest rate cuts. This was seen as a key factor that helped limit deeper losses for the Gold price.

Weaker US Economic Data & Bearish US dollar Impact on Gold Prices

On the US front, the broad-based US dollar has faild to stop its bearish rally and still flashing red due to weaker US retail sales and easing inflation data. This has increased market expectations for rate cuts by the Federal Reserve and contributed to the declines in the US dollar. Despite the Fed's more hawkish stance, indicating only one rate hike this year, investors are betting on two hikes in 2024. The softer economic data, including disappointing retail sales and declining inflation, suggest a slowing economy, strengthening the case for the Fed to lower borrowing costs sooner than anticipated.

On the data front, the Commerce Department released figures showing a modest 0.1% increase in US Retail Sales for May, slightly lower than the anticipated 0.2% growth. This subdued report suggests consumer fatigue and a deceleration in economic momentum, further supporting expectations that the Federal Reserve could move to reduce interest rates earlier than previously forecasted.

Therefore, the weaker US retail sales and easing inflation data are increasing expectations for Fed rate cuts, pressuring the US dollar and helping the Gold price to limit its deeper losses.

Positive Market Sentiment & Its impact on Gold Prices

On the other hand, the global market sentiment has been gaining momentum and remain positive as the S&P 500 opened higher around 5,487.03, hitting an intra-day high of 5,490.38. This is due to optimism fueled by strong performances in the technology sector, particularly with Nvidia surpassing Microsoft to become the world's most valuable company.

Therefore, the positive global market sentiment driven by hopes for interest rate cuts and strong gains in the S&P 500 had a negative impact on the safe-haven appeal of Gold as risk-on sentiment typically reduce demand for safe-haven assets like Gold, causing its price to decline.

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

GOLD (XAU/USD) - Technical Analysis

Gold (XAU/USD) is trading at $2331.94, up 0.03%, as it navigates a range-bound environment. The 4-hour chart highlights a pivot point at $2342.00, crucial for assessing the next price movement. Immediate resistance is at $2339.37, followed by $2353.95 and $2369.24. These levels are critical for any bullish advance.

On the downside, immediate support is found at $2308.16, with further support at $2297.24 and $2287.04. These levels are significant to prevent deeper declines. The Relative Strength Index (RSI) is at 59, indicating moderate momentum without overbought conditions, suggesting room for further movement.

The 50-day Exponential Moving Average (EMA) at $2320.59 provides substantial support, reinforcing the current price level. The overall outlook for gold remains cautiously bullish above the $2342.00 pivot point.

A break above this level could enhance bullish momentum, targeting the higher resistance levels. Conversely, a drop below immediate support at $2308.16 might trigger further selling pressure.

The strategic entry point is set to buy above $2326, with a take profit target at $2342 and a stop loss at $2318. This setup aims to capitalize on potential upward movements while managing downside risks.

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