GOLD Price Analysis – June 28, 2023

Daily Price Outlook

During the London trading session, gold prices (XAU/USD) probed the significant support level of $1,910.00. As the market awaits a strong interest rate signal from Federal Reserve Chairman Jerome Powell, the precious metal trends towards the key psychological support level of $1,900.00.

S&P500 futures have seen marked losses over the last 24 hours as market participants fret that Powell’s potentially hawkish remarks might stoke fears of an imminent US economic slowdown.

HSBC Asset Management anticipates a downturn in the US economy in the fourth quarter of 2018, which will be followed by a contractionary year and a European recession in 2024.

Even with the market’s cautious stance, the US Dollar Index (DXY) is struggling to stay above the vital resistance level of 102.60. It is widely expected that Powell will reiterate the bank’s position of raising interest rates at a “cautious pace.

” San Francisco Fed Bank President Mary Daly considers two more rate hikes this year as a “quite sensible” forecast.

Despite the Fed’s tight monetary policy, the US Durable Goods Orders for May held up well. Contrary to the market’s prediction of a 1% economic contraction, the economic indicator advanced by 1.7%, outperforming April’s figure of 1.2%.

XAU/USD bulls eye validation at $1,935 ahead of Powell’s speech and Confluence Detector

Before the crucial statements from leading central bankers at the European Central Bank (ECB) Forum, the gold price (XAU/USD) found it challenging to sustain its corrective rally.

The cautious sentiment ahead of this key event, coupled with mixed concerns over China—one of the largest global gold consumers—and stronger US data, have put XAU/USD traders under pressure.

Gold traders find themselves in a tricky spot as anticipation for additional Chinese stimulus clashes with growing apprehension about Beijing’s slower economic rebound and the potential for Sino-US tension due to recent AI restrictions on Chinese chip manufacturers.

Despite this, a slew of US data allowed the US Dollar to pare intraday losses and bolster bullish Fed bets, pushing XAU/USD bulls. Standout figures include the Durable Goods Orders, the Conference Board’s (CB) Consumer Confidence Index, and several housing stats.

Future comments from ECB President Christine Lagarde, Fed Chairman Jerome Powell, and Bank of England (BoE) Governor Andrew Bailey at the ECB Forum will be instrumental in guiding gold prices.

Among them, Powell will be closely watched as the Fed’s hawkish stance since revising its rate hike path has been a tease for US Dollar bears.

GOLD Price Chart – Source: Tradingview

GOLD – Technical Analysis

The esteemed precious metal, gold, is currently experiencing a notable downtrend, trading around the $1,910 level following a dip from the $1,929 mark.

Upon observing the four-hourly timeframe, it’s evident that gold has breached the descending triangle pattern, which previously extended significant support around the $1,930 mark. Now, this same level is acting as resistance.

Analysing the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD), we find both indicators are situated firmly within the sell zone, implying a strong likelihood of a continuing downtrend.

With this in mind, should gold prices succeed in breaking below the $1,909 level, the next target could potentially be around the $1,896 or $1,890 levels.

On the flip side, we see resistance forming around the $1,921 level, with a further resistance point likely to materialize around the $1,930 mark if surpassed. In conclusion, it’s critical to keep a close eye on the $1,920 level.

A continuation of the downtrend can be expected if gold stays below this point, and more importantly, if gold prices manage to drop below $1,909, the subsequent target could potentially be situated around $1,896 or $1,890.