Technical Analysis

GOLD Price Analysis – June 24, 2024

By LonghornFX Technical Analysis
Jun 24, 20244 min

Daily Price Outlook

Gold price (XAU/USD) started the new week on a bullish track and gained significant traction around the 2,325 level, hitting an intraday high of 2,332.

However, the bullish movement is largely due to heightened expectations of a Federal Reserve rate cut in September, which has put downward pressure on US Treasury bond yields, thereby supporting gold prices.

In the meantime, a risk-averse market sentiment, ongoing geopolitical tensions, and political instability in Europe have all played roles in driving the demand for gold as a safe-haven asset. On the other hand, stronger-than-anticipated US PMI figures have bolstered the US dollar, limiting further gains in gold prices.

Gold Price Boosted by Fed Rate Cut Expectations Amid Market Uncertainty

Despite the stronger-than-expected US PMIs and the Federal Reserve's unexpectedly hawkish stance, the US dollar failed to sustain its upward momentum and turned bearish. This shift is likely due to growing market expectations of a Fed rate cut in September.

Although the Federal Reserve has projected only one rate cut in 2024, market participants are anticipating the possibility of two cuts this year due to signs of easing inflation. The CME Group's FedWatch Tool indicates that there is currently more than a 60% chance that the Federal Reserve will start cutting interest rates at its September meeting.

This expectation is putting pressure on US Treasury bond yields and supporting the rise in gold prices.

Looking ahead, traders seem cautious and are likely to stay on the sidelines in anticipation of this week's significant US macroeconomic data releases, which include the final Q1 GDP figures and the Personal Consumption Expenditures (PCE) Price Index.

During this time, market participants will pay close attention to statements from key FOMC members for potential short-term trading cues.

On the data front, the US composite PMI rose slightly from 54.5 in May to 54.6 this month, marking its highest level since April 2022 and indicating a strong finish to the second quarter for the economy. Input prices declined to 56.6 from 57.2 previously, while output prices also slowed to 53.5, showing some of the smallest increases in four years.

As a result, the price of gold received a boost from heightened expectations of Federal Reserve interest rate cuts, driven by easing inflation worries and a weaker US dollar. This trend was further supported by market volatility and the anticipation surrounding upcoming significant economic data releases.

Geopolitical tensions and political uncertainty have strengthened gold's appeal as a safe-haven asset.

On the geopolitical front, the security agreement between Russian President Vladimir Putin and North Korean leader Kim Jong-un in Pyongyang has intensified tensions, raising concerns about potential escalation in geopolitical risks.

Moreover, French President Emmanuel Macron's declaration of snap elections has sparked fears of heightened political instability in Europe.

Therefore, the geopolitical tensions from the Russia-North Korea pact and European political uncertainty could bolster demand for gold as a safe-haven asset amid heightened global instability.

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

GOLD (XAU/USD) - Technical Analysis

Gold (XAU/USD) is currently trading at $2329.705, showing a modest increase of 0.19%. The pivot point, marked at $2342.00, serves as a critical level for future price movements. Immediate resistance is identified at $2336.56, followed by $2347.82 and $2358.70.

These resistance levels suggest potential upward targets, indicating a bullish sentiment if the price breaks above the pivot point.

On the downside, immediate support is observed at $2317.83, with further support levels at $2307.61 and $2296.11. These levels are crucial in preventing a sharp decline, providing key entry points for long positions.

The Relative Strength Index (RSI) stands at 44, indicating a slightly bearish sentiment. However, the 50-day Exponential Moving Average (EMA) at $2335.58 suggests that the current price is below this average, which might act as a resistance level in the short term.

Technical indicators imply a cautious bullish outlook for gold. Traders should consider a buy position above $2326, targeting a take profit at $2342. A stop loss at $2314 is recommended to mitigate potential losses.

Conclusion: Gold's technical setup suggests a potential bullish trend above the pivot point of $2342.00.

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