|

Gold Price Forecast: XAU/USD drops towards $1,825 support on recession fears, PMIs eyed

  • Gold takes offers to refresh intraday low inside weekly symmetrical triangle.
  • Fears of economic slowdown, monetary policy aggression weigh on prices amid a sluggish session.
  • Concerns surrounding the US-China trade deal, Beijing’s economic growth also exert downside pressure.
  • US PMIs, the second round of Fed Chair Powell’s testimony eyed for fresh impulse.

Gold Price (XAU/USD) renews intraday low around $1,832 as fears of economic slowdown join inflation woes to weigh on the metal prices amid a sluggish Asian session on Thursday. In doing so, the bullion stays on the way to the second consecutive weekly loss even as the US dollar fails to improve.

That said, the US Dollar Index (DXY) prints a four-day downtrend as Fed Chair Jerome Powell considered the present monetary policy bias appropriate to battle the inflation woes. It’s worth noting, however, that the Fed Boss’s readiness to use the aggressive measures, irrespective of their consequences, seemed to have put a floor under the greenback. On the same line is the latest news from Reuters signaling an upbeat print of June’s jobs report.

It’s worth noting that a slump in the US inflation expectations to the four-month low also drowns the greenback. That said, the US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, dropped for the third consecutive day to the fresh low since late February by the end of Wednesday’s North American session. That said, the inflation gauge’s latest print is 2.54%, the same as on February 25.

Elsewhere, a Reuters poll suggesting faster European Central Bank (ECB) rate hikes, to 0.75% by the year’s end, also challenge the gold prices. Additionally, the fall in the options market’s bullish bias over Gold Price, known as the risk reversal (RR), exerts downside pressure on the metal. That said, the spread between the call and put options, known as RR, dropped to the lowest levels in a week the previous day.

It should be noted, that the Fed and ECB aggression propel the market’s economic slowdown fears amid fragile activities.

Additionally, chatters that China President Xi Jinping may not be able to reach the optimistic growth targets, as well as the likely failures of the Sino-American trade talks, seem to weigh on the XAU/USD as well.

That said, S&P 500 Futures struggle for clear directions while US 10-year Treasury yields remain pressured around the weekly low, down 2.8 basis points to 3.13% by the press time.

Moving on, US S&P Global PMIs for June and the weekly Jobless Claims data will precede the second round of Fed Chair Jerome Powell’s Testimony will be important to watch for clear market directions.

Technical analysis

Gold extends pullback from the 200-SMA inside a one-week-old symmetrical triangle. The metal’s sidelined performance also gains support from steady RSI.

Hence, XAU/USD is likely declining towards the aforementioned triangle’s support line, around $1,825 by the press time.

However, the quote’s weakness past $1,825 will be challenged by an upward sloping support line from mid-May, around $1,809, as well as the $1,800 threshold.

On the contrary, recovery moves remain elusive until crossing the stated triangle’s resistance line, close to $1,847 at the latest. It’s worth noting that the 200-SMA level of $1,842 could guard the immediate rebound.

In a case where the bullion prices rally beyond $1,847, multiple hurdles around $1,870 could test the XAU/USD bulls before directing them to the monthly peak of $1,879.

Gold: Four-hour chart

Trend: Limited downside expected

Additional important levels

Overview
Today last price1834.71
Today Daily Change-3.03
Today Daily Change %-0.16%
Today daily open1837.74
 
Trends
Daily SMA201844.76
Daily SMA501867.33
Daily SMA1001891.58
Daily SMA2001843.58
 
Levels
Previous Daily High1847.95
Previous Daily Low1823.43
Previous Weekly High1879.26
Previous Weekly Low1805.11
Previous Monthly High1909.83
Previous Monthly Low1786.94
Daily Fibonacci 38.2%1838.58
Daily Fibonacci 61.8%1832.8
Daily Pivot Point S11824.8
Daily Pivot Point S21811.85
Daily Pivot Point S31800.28
Daily Pivot Point R11849.32
Daily Pivot Point R21860.89
Daily Pivot Point R31873.84

Author

Anil Panchal

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

More from Anil Panchal
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD falls toward 1.1700 on broad USD recovery

EUR/USD turns south and declines toward 1.1700 on Wednesday. The US Dollar gathers recovery momentum and forces the pair to stay on the back foor, as traders look to USD short-covering ahead of US inflation report on Thursday. However, the downside could be capped by hawkish ECB expectations. 

GBP/USD trades deep in red below 1.3350 after soft UK inflation data

GBP/USD stays under strong selling pressure midweek and trades below 1.3350. The UK annual headline and core CPI rose by 3.2% each, missing estimates of 3.5% and 3.4%, respectively, reaffirming dovish BoE expectations and smashing the Pound Sterling across the board ahead of Thurday's BoE policy announcements. 

Gold clings to moderate daily gains above $4,300

Following Tuesday's volatile action, Gold regains its traction on Wednesday and trades in positive territory above $4,300. While the buildup in the USD recovery momentum caps XAU/USD's upside, the cautious market stance helps the pair hold its ground.

Bitcoin risks deeper correction as ETF outflows mount, derivative traders stay on the sidelines

Bitcoin (BTC) remains under pressure, trading below $87,000 on Wednesday, nearing a key support level. A decisive daily close below this zone could open the door to a deeper correction.

Monetary policy: Three central banks, three decisions, the same caution

While the Fed eased its monetary policy on 10 December for the third consecutive FOMC meeting, without making any guarantees about future action, the BoE, the ECB and the BoJ are holding their respective meetings this week. 

AAVE slips below $186 as bearish signals outweigh the SEC investigation closure

Aave (AAVE) price continues its decline, trading below $186 at the time of writing on Wednesday after a rejection at the key resistance zone. Derivatives positioning and momentum indicators suggest that bearish forces still dominate in the near term.