On Tuesday, June 30th, international gold prices experienced choppy trading, closing with a slight decline. The market continues to price in the possibility of further interest rate hikes by the Federal Reserve, with Fed Governor Harker commenting that inflation remains too high and that rate hikes may need to be considered. Interest rate futures now indicate an 80% probability of a Fed rate hike in September. While concerns over a US-Iran memorandum of understanding limited some bargain-hunting demand for gold, the price action suggests a potential for a short-term rebound, though significant overhead resistance persists. The outlook for the latter part of the week remains one of volatility or a cautiously bullish stance from lower levels.
In terms of specific price movements, gold opened the Asian session at $4,018.34 per ounce, initially falling to a daily low of $3,943.86 around 9 a.m. It then found a bottom and rebounded, gaining strength towards the end of the Asian session. During European trading, it oscillated above the $4,000 level. The US session opening triggered another rally, pushing the price to a daily high of $4,063.10 before encountering resistance and pulling back to close at $4,007.41. The daily range was $119.24, with a net decline of $10.93, or 0.27%.
Looking ahead to Wednesday, July 1st, international gold opened slightly weaker, still pressured by short-term moving averages and the late-session pullback from the previous day.
However, the US dollar index has been weakening consecutively in recent days, with its upward momentum slowing, which should bolster demand for gold. Meanwhile, crude oil continues to trade weakly below its 200-day moving average, which may help alleviate inflationary pressures and provide support for gold prices. Consequently, the short-term bias for gold prices leans towards continued volatility or a higher probability of a rebound.
Market focus today will be on key US data releases, including the June ADP Non-Farm Employment Change, the S&P Global US Manufacturing PMI final reading for June, the ISM Manufacturing PMI for June, and the May Construction Spending month-over-month figure. Overall market expectations are leaning towards data that could be favorable for gold.
Additionally, during the US session, a panel discussion at the ECB's Global Central Banking Forum will feature speeches from Federal Reserve Chair Waller, ECB President Lagarde, Bank of England Governor Bailey, and Bank of Canada Governor Macklem. This event is expected to collectively signal the direction of global monetary policy, potentially triggering significant volatility in global currency and bond markets. It will also likely drive movements in the precious metals market.
Technical Analysis Overview
On the monthly chart, gold formed a bearish real body candle in June, indicating sustained selling pressure. This suggests the potential for a further decline in July towards the support of the Bollinger Band middle line around $3,820, or even lower. Until prices can recover and stabilize above $4,500, the broader trend will be treated as volatile with a bearish bias.
On the weekly chart, gold has formed several consecutive candlesticks indicating consolidation or potential bottoming/reversal patterns in recent weeks. However, it remains below the 5 and 10-week moving averages, maintaining a weak trend bias. Therefore, until it can reclaim the 60-week moving average around $4,130 or test the support of the 100-week moving average near $3,630, the primary view is for continued volatility with a downside bias.
On the daily chart, gold is currently consolidating and adjusting near horizontal support and the support line of the rising trend channel established from the 2024 low. There is some indication of a potential basing and consolidation pattern with a rebound bias. Nevertheless, as it remains below multiple moving average resistances, the immediate outlook is for continued range-bound trading. The focus is on the support of the aforementioned trendline for a potential initial bullish move, while watching for pullback pressures from various moving average resistances overhead.
Key Levels for Intraday Trading
The following are preliminary reference points for intraday trading ideas.
Gold: Support is eyed around $3,975 or $3,920; Resistance is watched near $4,030 or $4,070.
Silver: Support is seen around $57.35 or $56.60; Resistance is monitored near $59.70 or $60.50.
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