Gold price edges lower amid cautious Fed rhetoric
Updated
Gold prices (XAU/USD) traded in positive territory on Tuesday despite a weaker greenback. A stronger-than-expected US purchasing managers index (PMI) released last week prompted Federal Reserve (Fed) officials to push back the timing of their first interest rate cut this year. , this continues to limit gold's upward momentum. However, safe-haven flows due to geopolitical tensions in the Middle East and Ukraine could boost the yellow metal in the near term.
Investors will take more cues from speeches by Fed members on Tuesday, with Lisa Cook and Michelle Bowman expected to speak. The key US economic data to watch closely this week will be the final figures on US Gross Domestic Product (GDP) for the first quarter (Q1) on Thursday and the Price Index Personal consumption expenditures (PCE) for May. on Friday. Any evidence of an easing inflation trend could boost expectations of a Fed rate cut by the end of 2024. This in turn could drag the Greenback lower and create a favorable wind for Gold priced in USD.
XAU/USD Technical Overview
The gold price trades on a softer note on the day. The precious metal has formed a descending trend channel since May 10 on the daily timeframe. However, the yellow metal keeps the bullish vibe above the key 89-day Exponential Moving Average (EMA). Still, further consolidation cannot be ruled out as the 14-day Relative Strength Index (RSI) hovers around the 50-midline, indicating a neutral level between bullish and bearish positions.
The upper boundary of the descending trend channel at $2,350 will be the first stop for XAU/USD. A break above this level will pave the way to $2,387, a high of June 7. Further north, the next hurdle is seen at the all-time high of $2,450.
On the other hand, a low of June 21 at $2,316 acts as an initial support level for the yellow metal. Any follow-through selling will see a drop to $2,285, a low of June 7. The key contention level to watch is the $2,255-$2,260 zone, portraying the 89-day EMA and the lower limit of the descending trend channel.
Investors will take more cues from speeches by Fed members on Tuesday, with Lisa Cook and Michelle Bowman expected to speak. The key US economic data to watch closely this week will be the final figures on US Gross Domestic Product (GDP) for the first quarter (Q1) on Thursday and the Price Index Personal consumption expenditures (PCE) for May. on Friday. Any evidence of an easing inflation trend could boost expectations of a Fed rate cut by the end of 2024. This in turn could drag the Greenback lower and create a favorable wind for Gold priced in USD.
XAU/USD Technical Overview
The gold price trades on a softer note on the day. The precious metal has formed a descending trend channel since May 10 on the daily timeframe. However, the yellow metal keeps the bullish vibe above the key 89-day Exponential Moving Average (EMA). Still, further consolidation cannot be ruled out as the 14-day Relative Strength Index (RSI) hovers around the 50-midline, indicating a neutral level between bullish and bearish positions.
The upper boundary of the descending trend channel at $2,350 will be the first stop for XAU/USD. A break above this level will pave the way to $2,387, a high of June 7. Further north, the next hurdle is seen at the all-time high of $2,450.
On the other hand, a low of June 21 at $2,316 acts as an initial support level for the yellow metal. Any follow-through selling will see a drop to $2,285, a low of June 7. The key contention level to watch is the $2,255-$2,260 zone, portraying the 89-day EMA and the lower limit of the descending trend channel.
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