- Gold is having a tough time staging a convincing rebound.
- US Dollar Index fluctuates in tight channel below 92.00.
- Key technical levels for gold remain intact ahead of US PCE inflation data.
Update: Gold price is making another recovery attempt towards the $1790-$1795 supply zone, finding its feet amid a subdued US dollar across the board and mixed Asian equities. Despite a minor bid, gold price continues to trade within familiar levels amid mixed signals from the Fed on interest rate hikes and a slew of downbeat US economic data. The risks remain titled to the downside for gold price, given that a death cross is confirmed on the daily chart. Meanwhile, 100-Daily Moving Average (DMA) at $1793 remains a tough nut to crack for the gold bulls.
Attention now turns towards the critical US PCE inflation data, which is likely to back the Fed’s hawkish turn. Also, US stimulus updates will be closely followed.
Read: US May PCE inflation preview: Data likely to reaffirm FOMC's hawkish tilt
Gold gained traction during the European trading hours on Thursday and advanced to a daily high of $1,788 before reversing its direction in the second half of the day. As of writing, XAU/USD was down 0.2% on a daily basis at $1,775.
Following the mixed macroeconomic data releases from the US, the greenback remained resilient against its rivals and the US Dollar Index extended its sideways grind below 92.00.
Meanwhile, the S&P 500 Index notched a new all-time high after the opening bell and made it difficult for the USD to attract investors as a safe haven. US President Joe Biden announced on Thursday that they have reached a deal on the infrastructure spending plan following a meeting with a bipartisan group of senators. Moreover, Republican US Senator Portman said that the infrastructure deal will not include new taxes.
In its final estimate, the US Bureau of Economic Analysis (BEA) left the annualized first-quarter real GDP growth unchanged at 6.4% as expected. Additionally, the US Census Bureau reported that Durable Goods Orders rose by 2.3%, or $5.7 billion, to $253.5 billion in May, falling short of the market expectation for an increase of 2.7%. Finally, the weekly Initial Jobless Claims edged lower to 411,000 from 418,000.
On Friday, the BEA will release the May PCE inflation report and a significant market reaction could cause XAU/USD to break out of its weekly range. Earlier in the session, St. Louis Fed President James Bullard that inflation could be even stronger than expected and added that policymakers need to account for new inflation risks in the coming months. A stronger-than-expected PCE Price Index reading could allow the greenback to finish the week on a firm footing and vice versa.
US May PCE inflation preview: Data likely to reaffirm FOMC's hawkish tilt.
Gold technical outlook
Following Thursday's choppy action, gold's near-term technical outlook remains bearish with key levels remaining intact. On the daily chart, the Relative Strength Index (RSI) continues to move a little above 30, confirming the view that buyers are not yet interested in the precious metal.
On the downside, $1,770 (Fibonacci 61.8% retracement of April-June uptrend) aligns as key support ahead of $1,756 (April 29 low, static level) and $1,745 (static level). Resistances, on the other hand, could be seen at $1,795/$1,800 (psychological level, 100-day SMA, Fibonacci 50% retracement), $1,825 (Fibonacci 38.2% retracement) and $1,835 (200-day SMA).
Previous updates
Update: Gold (XAU/USD) pares the previous day’s losses to $1,777 amid a quiet market session and mixed catalysts for Friday’s early Asian session. The quote’s latest run-up could be linked to the news suggesting the Fed’s removal of pandemic-led restrictions on the large US banks. Earlier on Thursday, headlines concerning US President Joe Biden’s infrastructure deal and softer data at home, negated tapering fears, improved market sentiment and weighed on the gold prices.
It’s worth noting that technical pullback from 100-DMA and the month-end, as well as quarter-end, moves suggest further weakness of the yellow metal. However, risk catalysts and US Core Personal Consumption Expenditure (PCE) data may offer intermediate moves during a likely dull day.
Additional levels to watch for
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
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.