Gold Price Forecast: XAU/USD bears approach $1,900 on hawkish central banks, PMI data eyed


  • Gold Price renews three-month low after five-day losing streak, pressured of late.
  • Hawkish central bank actions amplify economic fears and underpin US Dollar demand, weighing on XAU/USD.
  • Mostly upbeat United States data, upbeat statements from Federal Reserve Chairman Jerome Powell also bolstered USD and favored Gold sellers.
  • Preliminary readings of PMIs for June eyed for further directions of Gold Price as it approaches $1,900 support confluence.

Gold Price (XAU/USD) remains depressed at the lowest levels since mid-March as bears attack the $1,913 level as the XAU/USD traders begin Friday’s Asian session with bears in power. That said, the bullion dropped the most in two weeks the previous day after major central banks and their policymakers advocated for higher rates, which in turn suggests more toll on the global economy amid tighter labor markets and higher inflation. The same joins the hawkish comments from the US Federal Reserve (Fed) Chairman Jerome Powell and mostly upbeat United States data to favor the US Dollar and weigh on the Gold Price.

Gold Price drops on central banks’ hawkish play

Gold Price declines in the last five consecutive days as bears prod the lowest levels in three months amid hawkish central bank actions, as well as the mixed US data. That said, a slew of central banks announced interest rate increases on Thursday. Among them, the majority crossed the market consensus but failed to impress the respective currencies amid fears that the broad rate hikes have an economic toll, which in turn directs the market players toward the US Dollar’s haven demand and drowns the Gold Price.

That said, the Bank of England (BoE), informally known as the “Old Lady”, surprised markets by lifting benchmark rates by 50 basis points (bps) to 5% versus major expectations favoring a 0.25% rate hike.

Further, the Swiss National Bank (SNB) matched market forecasts while announcing 25 basis points increase in its benchmark interest rate, to 1.75%. This was the fifth consecutive rate lift from the Swiss central bank. Additionally, the Central Bank of the Republic of Türkiye (CBRT) hiked rates for the first time since August 2021 whereas the Norges Central Bank announced rate increases.

Fed Chair Powell, US data weigh on XAU/USD price

Apart from the aforementioned rate hikes, hawkish statements from Fed Chair Jerome Powell also underpinned the US Dollar and joined mostly upbeat US data to propel the US Dollar and weigh on the Gold price.

On Thursday, Fed Chairman Jerome Powell repeated most of his previous day’s remarks during his testimony 2.0, this time in front of the Senate Housing Committee. However, his statements like, “(It) will be appropriate to raise rates again this year, perhaps two more times,” allowed the US Dollar to refresh the intraday high while eyeing to reverse Wednesday’s losses.

On the same line, Federal Reserve (Fed) Governor Michelle Bowman said that "Additional policy rate increases" will be needed to reach a sufficiently restrictive level and control inflation.

Talking about the data, US Chicago Fed National Activity Index for May dropped to -0.15 versus 0.0 expected and upwardly revised 0.14 previous readings. Further, the Initial Jobless Claims reprinted the 264K figures (revised) for the week ended on June 16 compared to 260K market forecasts. It’s worth noting that the Continuing Jobless Claims dropped unexpectedly to 1.759M from 1.772M (revised) prior and 1.782M analysts’ estimations. Additionally, US Existing Home Sales marked a surprise recovery by 0.2% MoM for May compared to -0.6% expected and -3.2% prior (revised from 3.4%).

It should be noted, however, that the recent downbeat comments from Thomas Barkin, President of the Federal Reserve Bank of Richmond, allow the Gold Price to lick its wounds near the multi-month high. However, the bearish trend remains intact.

Amid these plays, Wall Street benchmark closed mixed but the US Treasury bond yields were firmer.

Moving on, preliminary readings of the June month’s PMIs for the key economies will be crucial to watch for the intraday directions. However, major attention will be given to the market’s reaction to the recently hawkish central bank actions.

Gold Price technical analysis

Gold Price justifies a successful downside break of the $1,942 support confluence, now resistance, while approaching another key level towards the south.

That said, a convergence of the 50% Fibonacci retracement of the XAU/USD upside from late November to May 2023 and a seven-month-old support line, near $1,900, appears a short-term important support to watch for the Gold bears, especially amid the oversold conditions of the Relative Strength Index (RSI) line, placed at 14. It’s worth noting that the bearish signals from the Moving Average Convergence and Divergence (MACD) indicator add strength to the downside bias.

In a case where the Gold Price breaks the $1,900 support, the odds of witnessing a slump toward the 61.8% Fibonacci retracement near $1860, also known as the golden ratio, will be in the spotlight.

Alternatively, a downward-sloping resistance line from mid-May and the 38.2% Fibonacci retracement level join the 100-DMA to highlight the $1,942 as a crucial resistance to watch during the Gold Price recovery.

Should the XAU/USD crosses the $1,942 hurdle, February’s high of around $1,960 may act as an extra filter towards the north.

Gold Price: Daily chart

Trend: Limited downside expected

Additional important levels

Overview
Today last price 1913.88
Today Daily Change -18.51
Today Daily Change % -0.96%
Today daily open 1932.39
 
Trends
Daily SMA20 1952.53
Daily SMA50 1981.5
Daily SMA100 1942.49
Daily SMA200 1851.01
 
Levels
Previous Daily High 1939.54
Previous Daily Low 1919.23
Previous Weekly High 1971.01
Previous Weekly Low 1924.85
Previous Monthly High 2079.76
Previous Monthly Low 1932.12
Daily Fibonacci 38.2% 1926.99
Daily Fibonacci 61.8% 1931.78
Daily Pivot Point S1 1921.23
Daily Pivot Point S2 1910.08
Daily Pivot Point S3 1900.92
Daily Pivot Point R1 1941.54
Daily Pivot Point R2 1950.7
Daily Pivot Point R3 1961.85

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD recovers toward 1.0850 as risk mood improves

EUR/USD recovers toward 1.0850 as risk mood improves

EUR/USD gains traction and rises toward 1.0850 on Friday. The improvement seen in risk mood makes it difficult for the US Dollar (USD) to preserve its strength and helps the pair erase a portion of its weekly losses. 

EUR/USD News

GBP/USD stabilizes above 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD stabilizes above 1.2700 after downbeat UK Retail Sales-led dip

GBP/USD staged a rebound and stabilized above 1.2700 after dropping to a weekly low below 1.2680 in the early European session in response to the disappointing UK Retail Sales data. The USD struggles to find demand on upbeat risk mood and allows the pair to hold its ground. 

GBP/USD News

Gold rebounds to $2,340 area, stays deep in red for the week

Gold rebounds to $2,340 area, stays deep in red for the week

Gold fell nearly 4% in the previous two trading days and touched its weakest level in two weeks below $2,330 on Thursday. As US Treasury bond yields stabilize on Friday, XAU/USD stages a correction toward $2,340 but remains on track to post large weekly losses.

Gold News

Dogecoin inspiration Kabosu dies, leaving legacy of $22.86 billion market cap meme coin behind

Dogecoin inspiration Kabosu dies, leaving legacy of $22.86 billion market cap meme coin behind

Kabosu, the popular Shiba Inu dog that inspired the logo of the largest meme coin by market capitalization, Dogecoin (DOGE), died early on Friday after losing her fight to leukemia and liver disease.

Read more

Week ahead – US PCE inflation and Eurozone CPI data enter the spotlight

Week ahead – US PCE inflation and Eurozone CPI data enter the spotlight

Dollar traders lock gaze on core PCE index. Eurozone CPIs in focus as June cut looms. Tokyo CPIs may complicate BoJ’s policy plans. Aussie awaits Australian CPIs and Chinese PMIs.

Read more

Forex MAJORS

Cryptocurrencies

Signatures