GOLD continuing downtrend

Updated

XAUUSD reached a peak of $2,450 in May but has since fallen over 4%. This shift indicates a change in investor sentiment, with bullish investors likely seeking other opportunities. The weakness in gold may persist due to factors like inflation and the US central bank's restrictive stance.

Traders watching short positions should pay attention to the $2,335 support zone. This area combines important technical indicators, such as a key trendline and the 38.2% Fibonacci retracement of the March-May rally. If the price decisively falls below $2,335 with above-average trading volume, it would be a strong selling signal.

GOLD moves sideways ahead of Fed's favorite inflation data

If the price drops below $2,335, the next important level to watch is the 50-day simple moving average at $2,325. Breaking this support could lead to a further decline, with potential downside targets around $2,265, which is a critical Fibonacci level near this month's lowest point.

If bulls regain control and prices rise, resistance at $2,365 and $2,377 may pose a challenge. However, surpassing this level could change bearish sentiment and potentially lead to a rally towards $2,420. Further strength could even bring the all-time high back into play.

Note

- DXY has remained in a sideways range of 104.00-105.00 for the past two weeks. The index has not yet shown a potential future direction while still maintaining a sideways momentum.
- If DXY breaks above the 105.00 level, the index could retest the 106.00 resistance level.
- On the contrary, DXY could return to around 104.00, and if broken, could confirm the downtrend.

Note

- The second estimated US GDP growth rate (Q1) reached 1.3% on a quarterly annualized basis (QoQ), indicating that the economy is still growing, albeit a bit slower.
- Meanwhile, markets will be closely watching tonight's Personal Expenditures Price Index (PCE) figures, which could shape their future expectations of the Fed's policy interest rate.
- However, the Fed still gave mixed signals, with some officials issuing tougher statements (hawkish) and others more dovish (dovish).

Note

Published weekly, PCE cools down but does not yet support GOLD

Note

Gold prices decreased slightly by 0.25% in the week from May 27 to 31 and extended the decline for the second consecutive week, in line with other commodities as the market became less optimistic about the possibility of the US cutting interest rates. interest rate multiple times this year due to persistently high inflation.

Note

- Gold stabilized at about 2,325 USD/troy ounce (-0.28%). Silver closed at around $30.40 per troy ounce (+0.17%).

Note

ISM data have not been able to breathe new life into a series of poor data in the US that put pressure on the USD, and the greenback continues to weaken on a large scale due to falling yields. While orders/inventories continue to weaken, it can also be said that detailed data are not as tight as the "stagflation" speculations after a series of reports over the past few months.

Note

On the daily chart time frame, gold (XAUUSD) is approaching the $2,300 support zone and forming a potential ascending price channel. The $2,300 support zone coincides with the lower boundary of the price channel and the 78.6% Fibonacci extension. If gold bounces above the $2,300 support zone, the price could rally towards the $2,400 resistance, coinciding with the recent swing top.

Note

- DXY retested the 105.00 resistance level and could not sustain above this level. The index fell to 104.00.
- If DXY closes below the 104.00 support, the index could return to around 103.00.
- Conversely, DXY could stay in the 104.00-105.00 zone if the index remains above the 104.00 support level.

Note

🟢Treasury yields rise as investors weigh economic data

➡️U.S. Treasury yields were higher on Wednesday as investors considered the state of the economy amid a series of key data releases.

Note

This will mark the official end to the cycle of record rapid growth that began after the Covid-19 pandemic when inflation soared. However, investors' attention seems to have turned to what happens after the ECB's June interest rate cut.

Note

Inflation reached 2% one quarter later than in March.

Note

According to the Fed's statement on Thursday, the hypothetical scenario in the test simulates a severe global recession, stressing the residential and commercial real estate markets.

Note

🔴Gold extends decline after US Nonfarm Payrolls beats expectations

Gold (XAU/USD) falls all the way back to the $2,294s on Friday after the release of US Nonfarm Payrolls (NFP) data shows the US economy added 272K jobs in May when 185K had been expected. The result was also higher than the April figure which was revised down to 165K.
The US Bureau of Statistics (BLS) report showed a rise in Average Hourly Earnings of 4.1% YoY from a revised-up 4.0% in April, and beat estimates of 3.9%. The Unemployment Rate rose to 4.0%, however, when 3.9% had been forecast from 3.9% previously.

Note

🔻Gold price deflates after People’s Bank of China halts further buying
Gold is trending lower at the end of the week after the news that Gold reserves at the PBoC remained unchanged at 72.8 million troy ounces at the end of May, the exact same figure as at the end of April, according to official data from the PBoC on Friday.

🔻The data follows strong buying in April that saw China Gold reserves at the PBoC hit an all-time high, accounting for 4.9% of total reserves, and following 18 consecutive months of growth.

Note

The world gold market last week continuously received important data, causing prices to continuously reverse. Notably, on the last trading day of the week, the market suffered two shocks that caused prices to continuously "plunge".

In just 1 day, gold lost more than 3.5%, marking the largest intraday sell-off since 2020. In the current context, most analysts believe that gold prices are likely to test this level. support 2,200 USD/ounce.

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