Gold forecast saw a slight uptick on Friday despite the strengthening of the US dollar. The price of gold, measured in XAU/USD, benefited from ongoing geopolitical uncertainty, particularly tensions in the Middle East. However, the possibility of significant gains remains limited due to decreased expectations for an interest rate cut by the US Federal Reserve in September.
During times of global uncertainty, assets like gold tend to be viewed as safe investments, which may prevent the price from falling further.
The Influence of US Economic Data on Gold Prices
Recent US economic data has delivered mixed signals, influencing gold price trends. For the week ending May 18, Initial Jobless Claims decreased by 8,000, coming in at 215,000. This figure surpassed both the expected 220,000 and the previous week’s 223,000.
Additionally, the S&P Global Manufacturing PMI climbed to 50.9 in May, up from April’s 50.0. The Services PMI also saw an increase, reaching 54.8 from 51.3. This overall boost in both indices helped lift the Composite PMI to 54.4, its highest level since April 2022.
Federal Reserve Comments and Their Influence on the Gold Market
Gold traders are keeping a close eye on remarks from Federal Reserve officials. Any hawkish comments, like those expected from Fed official Waller on Friday, could exert downward pressure on gold prices. Historically, higher interest rates negatively affect gold as the opportunity cost of holding non-yielding assets increases.
Upcoming data, such as the US Durable Goods Orders and the Michigan Consumer Sentiment Index, will also provide crucial insight into future gold market movements.
Global Factors Impacting Gold Demand and Supply
In the first quarter of 2024, China’s private sector imported 543 metric tonnes of gold, while the People’s Bank of China added 189 tonnes to its reserves during the same period. These actions underscore China’s continued influence on the global gold market.
Meanwhile, India, the world’s second-largest gold consumer, is expected to see a 20% decline in gold imports this year. High prices are pushing retail buyers to exchange old jewelry rather than purchase new items, affecting overall demand.
Short-Term Gold Price Outlook
Gold prices (XAU/USD) face resistance around $2,351.20 while finding support at $2,311.15. Short-term fluctuations will likely be driven by rising interest rates and ongoing geopolitical instability, leading to cautious optimism.
Gold Price Forecast: Technical Analysis
Gold is currently trading at $2,334.63, reflecting a slight increase of 0.25%. Technical analysis of the 4-hour chart shows a key pivot point at $2,325.88. If prices hold above this level, there is potential for a bullish move. Resistance points are located at $2,351.20, $2,370.07, and $2,393.84, which could hinder further price increases.
On the downside, immediate support lies at $2,311.15, with additional support levels at $2,294.61 and $2,277.29. The 50-day Exponential Moving Average (EMA) is at $2,376.89, and the 200-day EMA is at $2,364.39. Current gold prices are below these EMAs, indicating a cautious bullish outlook.
Conclusion
As long as gold remains above the critical $2,325.88 level, a bullish outlook persists. However, if prices fall below this point, it could lead to increased selling pressure.
For more updates on the gold market, you can check out our Daily Gold Signal or stay updated with the latest Daily Gold Updates from our blog.
