Gold Price Forecast: XAU/USD slips to near $1,960 on hopes that fresh oil cut to keep Fed rates higher


  • Gold price has dropped sharply to near $1,960.00 as a surprise production cut by the OPEC+ would propel US Inflation.
  • The Fed could keep rates higher for a longer period to bring down fresh persistent inflation.
  • A power-pack action in the USD Index would continue ahead of the release of the US ISM Manufacturing PMI data.

Gold price (XAU/USD) is facing immense pressure in early Asia as United States inflationary pressures have propelled after the announcement of a surprise production cut by the OPEC+ on weekend. The precious metal has dropped firmly to near $1,960.00 on hopes that the Federal Reserve (Fed) would keep rates higher for a longer period. Expectations of a fresh impulse in US inflation led by higher oil prices after a sudden production cut are going to phase out odds of a steady monetary policy by the Fed in May.

According to Reuters, the oil cartel will cut the overall oil production by around 1.16 million barrels/day (bpd), which will lead to the overall pledge of production cut to 3.66 million bpd.

The US Dollar Index (DXY) has extended its upside momentum above 102.70 on expectations of the continuation of the 25 basis points (bps) rate hike spell by the Federal Reserve (Fed). This would push interest rates to 5.00-5.25%. S&P500 futures have dropped heavily in early Asia after a decent winning spree, portraying a caution in the overall risk-appetite theme.

A power-pack action in the USD Index would continue ahead of the release of the US ISM Manufacturing PMI data. As per the estimates, the Manufacturing PMI is expected to decline marginally to 47.5 from the former release of 47.7. This could be the fifth consecutive figure below 50.0, which itself is considered a contraction in manufacturing activities.

Apart from that, the Manufacturing New Orders Index will be keenly watched. The economic data provide cues about forward demand for goods, which is likely to contract firmly to 44.6 vs. the prior release of 47.00. Subdued consensus for the US Manufacturing PMI could be the outcome of higher interest rates by the Fed for bringing down persistent inflation.

Gold technical analysis

Gold price is hovering near the edge of the upward-sloping trendline of the Symmetrical Triangle chart pattern formed on an hourly scale. The upward-sloping trendline of the chart pattern is plotted from March 22 low at $1,934.34 while the downward-sloping trendline is placed from March 20 high at $2,009.88.

The Gold price has dropped below the 20-period Exponential Moving Average (EMA) at $1,974.10, which indicates that the short-term trend has turned bearish.

Meanwhile, the Relative Strength Index (RSI) (14) has slipped into the bearish range of 20.00-40.00, which indicates more weakness ahead.

Gold hourly chart

XAU/USD

Overview
Today last price 1964.12
Today Daily Change -4.88
Today Daily Change % -0.25
Today daily open 1969
 
Trends
Daily SMA20 1926.26
Daily SMA50 1893.07
Daily SMA100 1852.78
Daily SMA200 1783.91
 
Levels
Previous Daily High 1987.7
Previous Daily Low 1966.95
Previous Weekly High 1987.7
Previous Weekly Low 1944.08
Previous Monthly High 2009.88
Previous Monthly Low 1809.46
Daily Fibonacci 38.2% 1974.88
Daily Fibonacci 61.8% 1979.77
Daily Pivot Point S1 1961.4
Daily Pivot Point S2 1953.8
Daily Pivot Point S3 1940.65
Daily Pivot Point R1 1982.15
Daily Pivot Point R2 1995.3
Daily Pivot Point R3 2002.9

 

 

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 posts modest gains near 1.0850 on stronger PMI, weaker US Dollar

EUR/USD posts modest gains near 1.0850 on stronger PMI, weaker US Dollar

The EUR/USD pair trades in positive territory for the second consecutive day around 1.0850 in early Monday. The stronger-than-expected preliminary Eurozone Purchasing Managers Index for May provides some support to the Euro. 

EUR/USD News

GBP/USD rises to near 1.2750 despite diminishing expectations for Fed rate cuts

GBP/USD rises to near 1.2750 despite diminishing expectations for Fed rate cuts

GBP/USD advances for the second successive session, trading around 1.2740, near two-month highs, during the Asian hours on Monday. The appreciation in the GBP/USD could be attributed to the risk-on sentiment.

GBP/USD News

Gold: Acceptance above $2,350 is critical to sustain the upturn

Gold: Acceptance above $2,350 is critical to sustain the upturn

Gold price is building on the recovery from two-week lows early Monday, as US holiday-induced thin market conditions support buyers. Besides, renewed optimism around China’s economic growth prospects and a fresh escalation in the war between Israel and Hamas provide extra legs to the ongoing rebound in Gold price.

Gold News

BTC/USD appears poised for further outperformance

BTC/USD appears poised for further outperformance

Last week was another positive for BTC/USD, which was up +1.9% as of London’s close on Friday despite finishing considerably off its best levels. Price movement on the weekly timeframe has been working between the limits of a potential bullish flag pattern.

Read more

Final full week of May welcomes updated inflation data

Final full week of May welcomes updated inflation data

Monday will likely be a snoozer, with US and UK banks closing in observance of Bank Holidays. The majority of focus this week will fall on Friday’s US PCE inflation for April, alongside personal income and spending. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures