The price of gold (XAU/USD) continues to grapple with downward pressure, hovering near a two-week low and exhibiting resilience below the $2,300 threshold. Following a significant decline on the preceding day, marking its most substantial daily drop since June 2022, gold remains under selling pressure for a consecutive second day on Tuesday. The diminished apprehension regarding a broader conflict in the Middle East contributes to an overall positive market sentiment, prompting a flow of investment away from the safe-haven allure of gold.
Moreover, reduced expectations of interest rate cuts by the Federal Reserve bolster the US Dollar (USD), exerting downward pressure on the non-yielding precious metal, which has descended to levels not seen in over a fortnight.
Nevertheless, speculations revolving around potential interest rate cuts by major central banks throughout the year provide some support for gold prices, aiding in a reversal of intraday declines to below $2,300 levels. Traders display caution, refraining from aggressive trading positions and opting to await the release of flash Purchasing Managers’ Index (PMI) data, which often serves as a barometer for global economic health and subsequently influences demand for traditional safe-haven assets.
Attention within the market remains fixated on forthcoming economic indicators, particularly the Advanced US Q1 Gross Domestic Product (GDP) report scheduled for Thursday and the Personal Consumption Expenditures (PCE) Price Index slated for release on Friday.
Technical Analysis: Gold Price’s Battle with $2,300 Threshold
Examining the technical aspect, sustained acceptance below the $2,300 mark is deemed necessary for bearish forces to assume near-term control. A breakthrough and confirmation below the 23.6% Fibonacci retracement level of the February-April rally would bolster the likelihood of further intraday depreciating movements. Despite indicators on the daily chart showing signs of losing traction, they persist within positive territory, prompting caution among bearish traders. Therefore, prudence dictates awaiting further confirmation of selling pressure below the $2,300 level before committing to expectations of deeper losses.
Should the downward momentum persist, the gold price may descend towards the $2,260-2,255 range, corresponding to the 38.2% Fibonacci level, followed by the intermediate support at $2,225, en route to the confluence zone between $2,200-2,190, which encompasses the 50% Fibonacci level and the 50-day Simple Moving Average (SMA).
Conversely, any attempts at recovery are likely to encounter immediate resistance around the $2,325 region. A sustained breach beyond this level could propel the gold price towards the intermediate hurdle at $2,350-2,355, and subsequently, the supply zone around $2,380. Further resistance lies at the $2,400 psychological mark, with the all-time peak near $2,431-2,432 serving as a crucial milestone for bullish sentiment. A successful clearance of this level would signal a fresh impetus for bullish traders, potentially extending the recent rally observed over the past two months.