On June 26th, Thursday, our analysis suggested that a hawkish pivot by the Federal Reserve had significantly boosted market expectations for a rate hike this year, bolstering the US dollar to a fresh one-year high and directly pressuring gold prices. Consequently, our trading strategy advised monitoring resistance at $4020, followed by $4042, with support levels at $3959 and then $3900.
Subsequent market movements saw gold edge higher after the Asian session open on Thursday, encountering resistance near $4018 before retreating to find support around $3963. The price then consolidated below the key $4000 level until the US session commenced. Gold then broke above the $4000 resistance, used it as a support base after a pullback, and climbed to a daily high of $4044 before meeting resistance and settling around $4019. Overall, gold found support near our indicated level of $3959 and faced resistance near our $4042 mark, with $4020 transitioning from a short-term resistance to a support level, aligning largely with our forecast.
Wolfinance Star Analyst notes that Thursday's pause in gold's decline and subsequent bounce were primarily driven by the latest US PCE data. The month-over-month increase matched market expectations, while the year-over-year rise was slightly below forecasts. This absence of an inflation surprise eased some market concerns, prompting a retreat in the US dollar from its daily highs and supporting gold's rebound. However, the gains were relatively limited, with clear short-term resistance persisting. This is chiefly due to the Fed's hawkish shift, with its policy focus firmly anchored on combating inflation. The substantial rise in market expectations for a rate hike this year, and the anticipation of higher real interest rates, diminishes the appeal of non-yielding assets like gold, constituting the key factor pressuring prices recently.
On the daily chart, gold's decline paused with Thursday's rebound, offering a temporary respite from short-term downward pressure. Nonetheless, the limited bounce indicates that selling pressure remains evident. Key resistance levels to monitor include Thursday's high of $4044, which saw multiple rejections, followed by the 5-day Simple Moving Average around $4070 and the $4100 psychological level. For support, focus on the $4000 level, which gold broke above during the US session after being capped there during Asian and European trading. The next critical support is the recent six-month low of $3959, near Thursday's low, with a break below potentially targeting $3900. Technical indicators show the 5-day SMA and MACD in a bearish crossover, the KDJ in a bearish crossover, and the RSI's bearish momentum slowing. The overall short-term technical picture favors sellers, suggesting continued risk of further declines.
Intraday Gold Outlook: Although the US PCE data, showing inflation did not exceed expectations, has provided a temporary halt to gold's decline, the Fed's hawkish stance and the significantly heightened market expectations for a rate hike this year continue to exert key downward pressure on the metal. A range-trading approach is recommended. Monitor resistance at $4044, followed by $4070 and $4100. On the downside, watch support at $4000, then $3959 and $3900.
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