Gold (XAU) Daily Forecast: Gaza Ceasefire Optimism; Price Plunge Below $2,320

By:

Arslan Ali

Updated: Jun 3, 2024, 06:55 GMT+00:00

Key Points:

Gold prices at $2,320 amid rate cut expectations and easing inflation indicators.
Optimism over Gaza ceasefire and rising equity markets limit significant gold price movements.
China's Caixin Manufacturing PMI boosts confidence; traders await key U.S. macro data.

In this article:

Gold

-2.92%

Market Overview

Gold prices (XAU/USD) faced pressure in the Asian session on Monday, remaining near $2,320. This decline is largely due to optimism over a ceasefire in Gaza, which has reduced gold’s safe-haven appeal.

Additionally, expectations that the Federal Reserve will cut rates later this year, supported by recent data indicating easing inflation, have contributed to the drop.

The Bureau of Economic Analysis reported a 0.3% rise in the Personal Consumption Expenditures (PCE) Price Index for April, steady at 2.7% annually. Core PCE also rose by 2.8%, aligning with forecasts and supporting the case for a rate cut, which has weakened the U.S. dollar and lent some support to gold prices.

Geopolitical Factors and Central Bank Events

Geopolitical tensions, particularly the optimism over a Gaza ceasefire, announced by President Joe Biden, are also influencing gold prices. The ceasefire has limited gold’s downside, while the overall positive tone in equity markets caps significant upward movement.

China’s Caixin Manufacturing PMI rising to 51.7 in May has boosted investor confidence, yet traders remain cautious, awaiting key U.S. macro data, including the Nonfarm Payrolls (NFP) report on Friday.

Short-Term Forecast

Gold prices are expected to remain under pressure, trading below $2,320, as optimism over a Gaza ceasefire reduces the safe-haven appeal. Easing inflation and potential rate cuts by the Federal Reserve further influence market sentiment.

Gold Prices Forecast: Technical Analysis

Gold – Chart

Gold (XAU/USD) is trading at $2,320.89, down 0.05% in the 4-hour timeframe. Key price levels include a pivot point at $2,325.52. Immediate resistance levels are at $2,335.22, $2,351.05, and $2,366.43.

On the support side, the immediate level is $2,306.41, followed by $2,290.15 and $2,277.60. Technical indicators show the 50-day Exponential Moving Average (EMA) at $2,341.11 and the 200-day EMA at $2,353.07.

An upward trendline breakout at $2,325 could trigger a sharp selling trend down to $2,310 or lower. The outlook remains bullish above $2,325, but a break below this level may lead to significant declines.

About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

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