Technical Analysis

GOLD Price Analysis – June 6, 2024

By LonghornFX Technical Analysis
Jun 6, 20244 min

Daily Price Outlook

Gold price (XAU/USD) maintained its upward trend and remained positive around the 2,361 level, hitting an intraday high of 2,374. The reason for its upward trend can be attributed to increasing speculation regarding a Fed rate cut, which undermined the US dollar and contributed to gold price gains.

Additionally, the ongoing conflicts in the Middle East were seen as another key factor that kept the safe-haven gold price higher.

Moving forward, traders are keeping their eyes on the release of the weekly Initial Jobless Claims data from the US. Additionally, the focus will remain on the US monthly employment details, particularly the Nonfarm Payrolls (NFP) report due on Friday.

Impact of Economic Data and Federal Reserve Expectations on Gold Prices and US Dollar

On the US front, the broad-based US dollar weakened due to recently released poor macroeconomic data. This has strengthened the belief that the Federal Reserve will likely begin cutting interest rates later this year.

As a result, markets are now expecting an imminent rate cut by the Fed in response to signs of a slowing economy. This anticipation has driven US Treasury bond yields to their lowest levels in over two months, further pressuring the US dollar.

On the data front, the ADP reported that US private sector employment rose by 152,000 in May, missing the forecast of 173,000 and down from a revised 188,000 in April. Meanwhile, the ISM Services PMI climbed to 53.8 in May, its highest reading since August, exceeding expectations of 50.8.

However, the Prices Paid sub-index decreased to 58.1 from 59.2. Additionally, Friday's softer US Personal Consumption Expenditures (PCE) Price Index data indicated easing inflationary pressures.

Therefore, these developments led to a decline in US Treasury bond yields, bolstering gold prices.

However, the anticipation of a Federal Reserve rate cut, combined with softer economic data, pushed US Treasury bond yields down, thereby supporting gold prices in the face of easing inflationary pressures and ongoing economic uncertainties.

Geopolitical Escalation in Gaza Drives Investors to Safe-Haven Assets, Boosting Gold Prices

On the geopolitical front, the conflict in Gaza has escalated. Israeli airstrikes and shelling have resulted in civilian casualties. Hamas, which controls Gaza, is demanding a permanent ceasefire and a complete Israeli withdrawal.

Additionally, food distribution issues are causing a rise in hunger-related deaths in Gaza. Since October 7, the conflict has resulted in over 36,000 Palestinian deaths and nearly 83,000 injuries.

Consequently, rising geopolitical tensions are driving investors to seek safe-haven assets like gold, boosting its price amid the prevailing uncertainty and instability.

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

GOLD (XAU/USD) - Technical Analysis

Gold (XAU/USD) is currently trading at $2362.32, reflecting a 0.42% increase on a four-hour chart timeframe. The pivot point, set at $2383.00, serves as a critical level for determining the market direction.

Immediate resistance is identified at $2383.59, with subsequent levels at $2397.80 and $2412.74. On the downside, immediate support is found at $2334.40, followed by $2318.01 and $2300.52.

The Relative Strength Index (RSI) stands at 60, indicating a moderate upward momentum. The 50-day Exponential Moving Average (EMA) is positioned at $2343.88, suggesting that the current price is above the short-term average, reinforcing the bullish sentiment.

In conclusion, Gold maintains a bullish outlook above $2355. Traders are advised to consider buying at or above $2355 with a target price of $2383, while setting a stop loss at $2340 to manage potential downside risks.

The current technical indicators and key price levels suggest a favorable environment for buyers, particularly if gold prices continue to trade above the pivot point of $2383.00. However, vigilance is required as breaking below the immediate support level of $2334.40 could shift the sentiment to bearish, leading to potential declines towards the next support levels.

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