Technical Analysis

GOLD Price Analysis – June 26, 2024

By LonghornFX Technical Analysis
Jun 26, 20243 min

Daily Price Outlook

Gold prices (XAU/USD) struggled to recover and remained under pressure near the $2,315.34 mark, dipping to an intra-day low of $2,309.73. Several factors contributed to this decline, including a stronger US dollar and a prevailing risk-on sentiment in the markets.

The US dollar strengthened following hawkish comments from key Federal Reserve officials, indicating that the central bank is unlikely to cut interest rates soon, given the robust US economic conditions.

On the other hand, geopolitical tensions, such as escalating conflicts in Crimea and potential unrest in Israel and Lebanon, provided some support to gold prices amid broader market uncertainties.

Looking ahead, Investors are closely watching two crucial US economic releases this week: the final Q1 GDP figures scheduled for release on Thursday and the upcoming Personal Consumption Expenditures (PCE) Price Index report on Friday.

These data releases are expected to have a significant impact on Federal Reserve policy decisions and could potentially drive new trends in XAU/USD trading.

Impact of Hawkish Fed Remarks on US Dollar and Gold Prices

In the US, the US dollar continued its upward trajectory following overnight hawkish remarks by influential Federal Reserve officials. Their statements suggested a reluctance to cut interest rates due to the strong US economic performance.

This stance led to a slight increase in US Treasury bond yields, benefiting the USD and putting downward pressure on gold prices.

Fed Governor Michelle Bowman underscored a readiness to raise borrowing costs if inflation persists, highlighting that rate cuts are currently not on the table.

Meanwhile, Fed Governor Lael Brainard indicated that future rate adjustments might be necessary depending on inflation expectations, highlighting a cautious approach to monetary policy.

Therefore, the hawkish tone from Fed officials, signaling a delay in potential rate cuts amid economic strength, bolstered US Treasury yields and strengthened the US dollar. These factors typically weigh on gold prices.

Geopolitical Tensions and Their Impact on Safe-Haven Assets

On the geopolitical front, tensions escalated as Russia's Foreign Ministry summoned US Ambassador Lynne Tracy over alleged US involvement in Crimea, hinting at retaliatory measures.

Simultaneously, concerns persisted about potential conflicts between Israel and Lebanon fueled by escalating tensions involving Hezbollah.

These geopolitical uncertainties sustained market anxiety and supported safe-haven assets like gold. Such geopolitical developments highlight ongoing instability, influencing investor sentiment and contributing to gold's resilience amid broader market volatility.

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

GOLD (XAU/USD) - Technical Analysis

Gold prices are under pressure, trading at $2315.315, down 0.19%. The 4-hour chart shows a pivot point at $2320.17, indicating a critical level for market direction. Immediate resistance levels are set at $2335.29, $2346.16, and $2355.37.

On the downside, immediate support is found at $2304.20, followed by $2296.11 and $2286.75.

The Relative Strength Index (RSI) is currently at 37, reflecting bearish sentiment. The 50-day Exponential Moving Average (EMA) is positioned at $2334.85, serving as a resistance level near the current price.

Given the current technical indicators, the outlook for gold remains bearish below the pivot point of $2320.17. A sustained move below this level could trigger further declines towards the immediate support at $2304.20.

Conversely, a break above the immediate resistance at $2335.29 could indicate a shift towards a bullish trend, but this seems unlikely given the prevailing market conditions.

For traders, the strategy remains to sell below $2320, with a target take profit level at $2303 and a stop loss set at $2329.

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