- Gold price edges higher amid a modest USD downtick, albeit lacks follow-through.
- A softer risk tone further lends support, though hawkish Fed expectations cap gains.
- Traders look to the US macro data before positioning for a firm near-term direction.
Gold price (XAU/USD) attracts some buying in the vicinity of the $2,300 mark and builds on its steady intraday ascent through the first half of the European session on Thursday. This marks the first day of a positive move in four and is sponsored by a modest US Dollar (USD) weakness, which tends to benefit the commodity. Apart from this, a mildly softer tone around the equity markets is seen as another factor lending some support to the safe-haven precious metal.
The upside for the Gold price, however, seems limited as investors might prefer to wait for more clarity about the likely timing when the Federal Reserve (Fed) will begin its rate-cutting cycle. Hence, the focus will remain glued to the key US macro data – the Advance Q1 GDP report due later today and the Personal Consumption Expenditures (PCE) Price Index on Friday. This will play a key role in influencing the USD and provide a fresh directional impetus to the XAU/USD.
Daily Digest Market Movers: Gold price draws support from weaker USD and softer risk tone
- Investors await key US economic data for clarity about the timing when the Federal Reserve will start cutting rates, leading to subdued range-bound price action around the Gold price for the second straight day on Thursday.
- The first estimate, or the Advance US GDP report is due for release later today and is expected to show that the world's largest economy grew by 2.5% annualized pace during the first quarter as compared to the 3.4% previous.
- The focus will then shift to the Fed's preferred inflation gauge – the core Personal Consumption Expenditures (PCE) Price Index – on Friday, which will play a key role in determining the near-term trajectory for the XAU/USD.
- The US Census Bureau reported on Wednesday that Durable Goods Orders climbed 2.6% in March as compared to the previous month's downwardly revised 0.7% increase, while new orders excluding transportation rose 0.2%.
- This comes on the back of strong US consumer inflation figures and hawkish remarks by Fed officials, reaffirming bets that the central bank will not begin its rate-cutting cycle before September and capping the non-yielding metal.
- The global risk sentiment remains supported by easing concerns about a further escalation of geopolitical tensions in the Middle East, which is seen as another factor acting as a headwind for the safe-haven precious metal.
- The US Dollar bulls seem reluctant to place aggressive bets and remain on the defensive ahead of important macro releases, offering some support to the XAU/USD and limiting any meaningful downside for now.
Technical Analysis: Gold price might confront resistance near overnight swing high, around $2,337
From a technical perspective, the Gold price now seems to have found acceptance below the 23.6% Fibonacci retracement level of the February-April rally, albeit showing some resilience below the $2,300 mark earlier this week. Moreover, oscillators on the daily chart – though have been losing traction – are still holding in the positive territory. Hence, it will be prudent to wait for some follow-through selling below the $2,300-2,290 area, or over a two-week low touched on Tuesday, before positioning for an extension of the recent pullback from the all-time peak. The subsequent downfall has the potential to drag the XAU/USD to the $2,260-2,255 area, or the 38.2% Fibo. level, en route to the $2,225 intermediate support and the $2,200-2,190 confluence, comprising the 50% Fibo. level and the 50-day Simple Moving Average (SMA).
On the flip side, immediate resistance is pegged near the $2,325 area ahead of the overnight swing high, the $2,337-2,338 zone. A sustained move beyond could allow the Gold price to test the next relevant hurdle near the $2,350-2,355 region and climb further towards the $2,380 supply zone. This is closely followed by the $2,400 round figure and the all-time peak, near the $2,431-2,432 area, which if cleared will set the stage for an extension of the recent blowout rally witnessed over the past two months or so.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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
AUD/USD languishes near YTD trough near 0.6350
AUD/USD stays vulnerable near 0.6350, sitting at multi-month lows early Friday. A bullish US Dollar and higher on hawkish December Fed rate cut bets weigh on the pair amid a risk-off market mood. Dovish RBA tilt also remains a drag on the major.
USD/JPY retakes 153.00 on fading hopes of BoJ rate hike
USD/JPY buyers are re-attempting 153.00 in Asian trading on Friday. The pair's upside is due to the growing acceptance that the BoJ will not raise rates next week. Further, the ongoing US Dollar advance, bolstered by expectations for a hawkish Fed rate cut, supports the pair.
Gold buyers not ready to give up yet
Gold's price looks to resume this week’s recovery to monthly highs of $2,726 early Friday, following Wednesday’s brief aberration. The US Dollar consolidates recent gains alongside the US Treasury bond yields amid a relatively light economic calendar heading into the weekend.
Pro-crypto French Hill selected as Chairman of the House Financial Services Committee
Republican party members selected pro-crypto French Hill as the Chairman of the US House Financial Services Committee on Thursday to replace retiring Patrick McHenry.
Can markets keep conquering record highs?
Equity markets are charging to new record highs, with the S&P 500 up 28% year-to-date and the NASDAQ Composite crossing the key 20,000 mark, up 34% this year. The rally is underpinned by a potent mix of drivers.
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.