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Gold (XAU) Daily Forecast: Resistance at $2,393; Fed Rate Cut Speculation

By:
Arslan Ali
Published: Jul 8, 2024, 05:59 GMT+00:00

Key Points:

  • Gold faces selling pressure as PBoC halts purchases, impacting prices.
  • Fed rate cut speculation boosts gold amid US economic uncertainties.
  • US employment data influences market, increasing Fed rate cut chances.
Gold (XAU) Daily Forecast: Resistance at $2,393; Fed Rate Cut Speculation

In this article:

Market Overview

The Gold price (XAU/USD) experienced selling pressure during the early European session on Monday. Official data released on Sunday indicated that the People’s Bank of China (PBoC) halted its gold purchases for the second consecutive month in June. As China is the world’s largest consumer of bullion, this pause could negatively impact the Gold price.

US Fed Rate Cut Speculation Supports Gold Prices

Conversely, rising speculation that the US Federal Reserve (Fed) might cut interest rates in the third quarter could support the non-yielding Gold price. Additionally, political uncertainty in France, following exit polls suggesting a hung parliament from the French parliamentary elections, might drive investors toward safe-haven assets like Gold.

Traders are also closely monitoring Fed Chair Jerome Powell’s testimony on Tuesday and the US June Consumer Price Index (CPI) inflation data on Thursday for further direction.

US Employment Data and Its Influence on XAU/USD

Recent US employment data showed that Nonfarm Payrolls (NFP) increased by 206K in June, slightly above market expectations of 190K, although revised down from 218K in May. The Unemployment Rate edged up to 4.1% from 4% in the previous month.

Average Hourly Earnings growth slowed to 3.9% year-over-year in June from 4.1% in May, aligning with market expectations. This employment data has increased the likelihood of a Fed rate cut in September, with markets now pricing in a 77% chance, up from 70% before the report.

Gold Prices Remain High Amid Uncertain Market Conditions

Gold prices appear elevated, and the PBoC might be waiting for further declines before resuming its gold purchasing program. “It appears that gold prices remain a little too high, and the PBoC is waiting for a further pullback before resuming its gold purchasing programme,” said Nitesh Shah, a commodity strategist at WisdomTree.

Political developments in France, with the New Popular Front (NFP) led by Jean-Luc Mélenchon potentially winning the most seats in the second voting round of French parliamentary elections, add to the uncertainty.

Short-term Forecast

Gold (XAU/USD) is trading at $2,384.720, facing resistance at $2,393.17. A break below the $2,381.09 pivot point may trigger selling pressure, with support at $2,371.91.

Gold Prices Forecast: Technical Analysis

Gold - Chart
Gold – Chart

Gold (XAU/USD) is trading at $2,384.720, down 0.30% on the 2-hour chart. The pivot point at $2,381.09 is critical. Immediate resistance levels are at $2,393.17, $2,401.85, and $2,412.05. Key support levels to watch are $2,371.91, $2,362.21, and $2,350.81.

The 50-day Exponential Moving Average (EMA) stands at $2,359.76, while the 200-day EMA is at $2,339.76, indicating a bullish trend above $2,381.09. However, a break below this pivot could trigger a sharp sell-off.

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About the Author

Arslan Aliauthor

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.

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