The price of gold (XAU/USD) exhibited marginal gains on Tuesday despite a weaker US Dollar. The Federal Reserve’s cautious stance, prompted by a robust US Purchasing Managers Index (PMI) last week, has delayed expectations of an interest rate cut this year, limiting upward momentum for gold. However, ongoing geopolitical tensions in the Middle East and Ukraine continue to bolster safe-haven demand, potentially supporting the yellow metal in the near future.
Investor focus remains keen on speeches by Federal Reserve members Lisa Cook and Michelle Bowman scheduled for Tuesday. Key US economic data anticipated later in the week, including the final Q1 Gross Domestic Product (GDP) reading on Thursday and the May Personal Consumption Expenditure (PCE) Price Index, will likely shape market sentiment. Signs of easing inflation could heighten expectations of future Fed rate cuts, potentially weakening the US Dollar and benefiting USD-denominated gold.
Technical Analysis Points to Short-Term Pressure on Gold Price
Gold prices are currently under slight pressure, having formed a descending trend channel since May 10 when analyzed on a daily basis. Despite this trend, the precious metal maintains a bullish sentiment above its crucial 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) hovering around the neutral 50-midline suggests a balanced market sentiment between bullish and bearish forces.
The upper boundary of the descending trend channel stands at $2,350, representing the initial resistance level for XAU/USD. A breakthrough above this barrier could lead to further gains towards $2,387, the high observed on June 7. Beyond that, the next significant resistance level lies at the all-time high of $2,450.
Conversely, initial support for gold is seen at $2,316, corresponding to the low recorded on June 21. A breach below this level might extend the decline to $2,285, marking the low of June 7. Of particular interest is the $2,255-$2,260 zone, which encompasses both the 100-day EMA and the lower boundary of the descending trend channel, serving as a critical support area.
In summary, while gold prices show resilience amid geopolitical tensions, cautious remarks from the Federal Reserve and upcoming economic data releases will likely dictate its short-term trajectory.
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