Gold Price Forecast: Supported by Weaker Dollar Ahead of Powell, Economic Data

Highlights

• Gold rises as US Dollar weakens and significant economic data approaches.
• Anticipation builds for Fed Chair Powell’s speech and rate hike projections.
• China’s data releases impact gold as investors seek economic recovery signs.

US Influences

Comex Gold futures are edging higher on Tuesday as the US Dollar weakens, positioning gold for potential gains ahead of significant economic data releases from the United States scheduled for later in the week.

The upcoming speech by U.S. Federal Reserve Chair Jerome Powell is also attracting attention as investors seek insights into the potential direction of interest rate hikes.

Investors currently estimate a 74% chance of a rate hike in July, with projections of rate cuts from 2024 onwards. Benchmark U.S. yields have rebounded from a near three-week low observed in the previous session. Non-yielding assets like gold, often sought as a safe haven during economic uncertainty, face discouragement due to high interest rates.

If the dollar continues its decline and yields slightly increase due to a more accommodative tone from the Fed and positive economic data, gold may encounter obstacles but is expected to maintain relative stability.

China Influences

Gold futures are also being influenced by the anticipation of significant economic data releases from China. Investors eagerly await the release of China’s Purchasing Managers’ Index (PMI) and industrial profit figures for May, along with the manufacturing and non-manufacturing PMI for June. These data releases could provide hints about potential stimulus measures aimed at bolstering economic recovery in China, a major consumer of gold.

Market sentiment and Outlook

Gold faces the challenge of reconciling the signs of a deepening slowdown in global economic activity with the hawkish stance of central banks. The market is also closely watching the upcoming speech by Fed Chair Jerome Powell for further insights into the path of interest rate hikes. Traders are balancing concerns about a global economic slowdown with the anticipation of rate hikes and potential risk appetite. The outcomes of economic data releases from both the United States and China will play a significant role in shaping market sentiment in the short term.

Short-Term Outlook

Gold futures could continue to ease higher due to a weaker dollar. As well as the anticipation of key economic data releases from both the United States and China. The market will be closely monitoring the upcoming speech by Fed Chair Jerome Powell for insights into interest rate hikes. Traders are also expected to navigate the challenges posed by global economic slowdown concerns and the hawkish stance of central banks. The outcomes of economic data releases will provide crucial information and influence market sentiment in the near future.

Technical Analysis

Market sentiment for Comex Gold is leaning slightly towards the bearish side. With the current price below the previous close and deviations from both the 200-4H and 50-4H moving averages, there is a lack of strong upside momentum. The neutral RSI reading further supports the cautious stance of market participants.

The main support at 1930.40 to 1919.50 is providing a potential floor, but the market would have to overcome the 50-4H moving average at 1948.40 to validate its imporance