During the Asian trading session on Wednesday, gold prices (XAU/USD) exhibited a slight upward trend, attracting some buying interest. This movement comes against the backdrop of geopolitical tensions and uncertainties, along with ongoing central bank acquisitions, fostering a safe-haven appeal for gold. However, despite weaker-than-anticipated US employment reports in April, the optimistic remarks from Federal Reserve (Fed) officials regarding potential interest rate cuts in 2024 might hinder the precious metal’s ascent.
Scheduled for later on Wednesday, Federal Reserve members Philip Jefferson, Susan Collins, and Lisa Cook are expected to deliver speeches, which could lean towards a hawkish stance. Such commentary may bolster the US Dollar, consequently exerting pressure on gold priced in USD. Gold traders are also keeping a close eye on Friday’s consumer sentiment data from the University of Michigan.
Technical Analysis: Long-Term Outlook Remains Constructive for Gold
While the day saw gold prices strengthening, the overarching positive outlook for the precious metal remains intact, with XAU/USD trading above the critical 100-day Exponential Moving Average (EMA) and displaying an upward trajectory.
In the short term, however, gold has been confined within a descending trend channel since mid-April. This bearish trend is reinforced by the 14-day Relative Strength Index (RSI), persistently below the 50 midline.
The $2,300 psychological threshold represents the initial downside target for XAU/USD, with any sustained selling pressure below this level potentially exposing the lower boundary of the descending trend channel around $2,260. A breach below this level could pave the path towards the April 1 low at $2,228, followed by the $2,200 mark.
On the upside, immediate resistance is anticipated near the May 6 high of $2,232, followed by a notable barrier around the $2,350–$2,355 region, marked by the upper boundary of the descending trend channel and the April 26 high. Further upward momentum could target the $2,400 round figure, en route to the all-time high near $2,432.