The gold price struggles to gather impetus on Tuesday, oscillating in a narrow trading zone. Around $1,920 during the Asian session. Meanwhile, the XAUUSD appears to have found acceptance above the 200-hour Simple Moving Average (SMA). For the first time since June 16 and may attempt to build on the recent rebound from the $1,893 region. Or a three-and-a-half-month low reached last Thursday.
Economic worries underpin the safe-haven Gold.
The impending economic downturn Data from the United States (US) raised doubt on the necessity. For the Federal Reserve (Fed) to tighten policy further. Putting the US Dollar (USD) bulls on the defensive and supporting the gold price. It’s worth noting that the US Bureau of Economic Analysis stated on Friday. That the annual PCE Price Index fell to 3.8% in May from 4.3% the previous month. While the core gauge fell to 4.6% from 4.7% in April.
Furthermore, the Institute for Supply Management’s (ISM) Manufacturing PMI fell to 46.0 in June. The lowest level since May 2020. This is the ninth consecutive month of shrinkage. Which adds to concerns about a global economic crisis and appears to boost the dollar. Gold as a safe refuge. Despite the supportive reasons, the XAUUSD remains below the one-week high reached on Monday, indicating that strong bullish wagers should be avoided.
Traders are looking forward to the main reports from the United States this week.
Given that US markets will be closed for Independence Day, somewhat weak liquidity is keeping traders on the sidelines ahead of this week’s important US announcements. On Wednesday, the minutes of the June Federal Open Market Committee (FOMC) meeting will be released, and they will be extensively scrutinized for clues regarding the Fed’s future rate-hike course. On Friday, the US monthly jobs statistics, known as Nonfarm Payrolls (NFP), will be released.
In the meanwhile, hawkish central banks should serve as a drag on the gold price. Bets on a 25-basis point (bps) rate rise at the next FOMC meeting on July 25-26, as well as a more hawkish perspective espoused by major central banks, may continue to operate as a drag on the non-yielding Gold price. Aside from that, the recent risk-on rise in global equities markets should help to limit the safe-haven precious metal’s potential. As a result, it is wise to wait for substantial follow-through purchasing before concluding that the XAUUSD has established a near-term bottom and preparing for any meaningful upward advance.
Gold Technical Outlook
Technically, the overnight swing high, at $1,931, appears to be acting as an immediate barrier. This is followed closely by the 100-day Simple Moving Average. Currently, the price is hovering around $1,942, which, if decisively cleared, might spark a short-covering surge.
The gold price may then accelerate its rebound towards the $1,962-$1,964 resistance level on its way to the $1,970-$1,972 supply zone. Bulls should be able to retake the $2,000 psychological level and test the $2,010-$2,012 resistance with some follow-through purchasing.
On the other hand, immediate support is located in the $1,908-$1,907 region, ahead of the $1,900 round-figure level and the multi-month low, which was reached last week in the $1,893-$1,892 zone. A convincing break below will disclose the extremely crucial 200-day Simple Moving Average (SMA), which is now at $1,860, and expose the Gold price to accelerate its downward journey.
