Gold has been unappealing to buyers for three weeks. Strong economic data and high inflation led to a drop in gold prices. For the third consecutive week, the price per ounce of gold fell, leading to renewed discussions of a June rate hike. This shift in interest rate projections is the primary explanation for the decrease in gold’s value.
The inflation growth rate has not decreased yet!
Macroeconomic data was the main driver of the market. The durable goods index, consumer spending, and US PCE inflation all exceeded projections. US Federal Reserve emphasized the PCE index, which peaked at 4.7% in April. The near 5% US inflation merits ongoing interest rate adjustments. 0.25% hike anticipated by investors.
The US dollar strengthened
While the ounce of gold is down, the US dollar is up. According to analysts, the gold ounce will likely be under pressure until the beginning of the third quarter of 2023 due to strengthening interest rate expectations. Meanwhile, the only debt crisis of the US federal government can support the gold ounce. Negotiations on raising the federal government’s debt ceiling are ongoing and have yet to come to a conclusion.
It is still too early to talk about the formation of a price floor in the market. It is true that an ounce of gold has dropped from its historical peak of $125, but there is still no news of a price floor. It seems that the fair price of an ounce of gold is in the range of 1923 to 1945 dollars assuming US interest rate hikes in June and July.
According to the weekly chart of XAUUSD, the price has reached the upward trend line following the downward reversal from the rate of $2055. In this week’s trading, the ounce of gold will face the trend line again. It seems that the bearish momentum in the market has increased.
If selling pressures increase and the upward trend line is broken, the market structure will change to a downward trend its possible that the price drop to the first support area of $1,923, and the key support of $1,871
But if the trend line turns into support and the price crosses above the partial resistance of $1950, the market can start a new upward movement first up to the trend rate of $2000.
Affecting news/events for gold
|517.667||High||USD||ISM Non-Manufacturing PMI (May)||05/06/2023 02:00 PM||51.9||51.8||50.3|
|517.658||High||USD||Services PMI (May)||05/06/2023 01:45 PM||53.6||55.1||54.9|
|490.876||High||USD||Unemployment Rate (May)||02/06/2023 12:30 PM||3.4%||3.5%||3.7%|
|490.872||High||USD||Nonfarm Payrolls (May)||02/06/2023 12:30 PM||253K||180K||339K|
|490.868||High||USD||Average Hourly Earnings (MoM) (May)||02/06/2023 12:30 PM||0.5%||0.4%||0.3%|
|490.844||High||USD||Crude Oil Inventories||01/06/2023 03:00 PM||-12.456M||4.488M|
|490.841||High||USD||ISM Manufacturing PMI (May)||01/06/2023 02:00 PM||47.1||47.0||46.9|
|490.832||High||USD||Initial Jobless Claims||01/06/2023 12:30 PM||229K||235K||232K|
|490.830||High||USD||ADP Nonfarm Employment Change (May)||01/06/2023 12:15 PM||296K||170K||278K|
|490.777||High||USD||JOLTs Job Openings (Apr)||31/05/2023 02:00 PM||9.590M||9.775M||10.103M|