Gold Prices Fall As OPEC+ Oil Output Cuts Raise Inflation Concerns

Highlights

• OPEC+ oil output cuts raise inflation concerns
• Rising interest rates make gold less appealing
• Investors weigh gold’s safe-haven appeal against inflation fears

Overview

Gold prices fell on Monday after OPEC+ announced oil output cuts, raising concerns of inflation and an imminent interest rate hike by the U.S. Federal Reserve in May. The increase in interest rates makes holding non-yielding bullion more expensive.

At 06:03 GMT, June Comex gold futures are trading $1969.30, down $16.90 or -0.85%. XAU/USD is at $1952.25, down $4.895 or -0.25%. On Friday, the SPDR Gold Shares ETF (GLD) settled at $183.21, down $0.97 or -0.53%.

Investors Weigh Gold’s Safe-Haven Appeal Against Inflation Fears

Investors are considering the value of gold as a safe-haven asset versus the possibility of higher interest rates. The fear of inflation and rising interest rates has taken the upper hand, especially if crude oil futures surge again, leading to another increase in inflation.

Saudi Arabia and other OPEC+ oil producers’ announcement of output cuts led to a significant increase in oil prices. This may be a foreboding sign for global inflation, following a slowdown in U.S. price data that had boosted market confidence just days before.

Daily June Comex Gold Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending higher. A trade through $2031.70 will signal a resumption of the uptrend. A move through $1953.70 will change the main trend to down.

The minor trend is also up. A trade through $1962.70 will change the minor trend to down. This will confirm the shift in momentum.

The closest resistance is $1992.70 – $2001.90, followed by $2045.80. The nearest support is $1968.90, followed by $1931.00 – $1907.20.

Daily June Comex Gold Technical Forecast

Trader reaction to the 50% level at $1968.90 is likely to determine the direction of June Comex gold futures on Monday.

Bullish Scenario

A sustained move over $1968.90 will indicate the presence of buyers. This could trigger a rally into the resistance area at $1992.70 – $2001.90, followed by 2005.50. The latter is a potential trigger point for an acceleration into the pair of main tops at $2023.90 – $2031.70.

Bearish Scenario

A sustained move under $1968.90 will signal the presence of sellers. Taking out the minor bottom at $1962.70 will indicate the selling pressure is getting stronger, while a trade through $1953.70 will change the main trend to down. This would put the market on track for a test of $1931.00 – $1907.20.