Gaza Ceasefire Boosts Gold Prices, particularly XAU/USD, faced downward pressure in Monday’s Asian trading session, hovering around the $2,320 mark. The primary cause of this dip was the growing optimism over a ceasefire in Gaza, reducing gold’s appeal as a safe-haven asset. Additionally, expectations of a Federal Reserve rate cut later in the year, fueled by signs of easing inflation, further contributed to this decline.
The Bureau of Economic Analysis recently reported a 0.3% rise in the Personal Consumption Expenditures (PCE) Price Index for April, maintaining an annual rate of 2.7%. Similarly, the Core PCE increased by 2.8%, in line with forecasts. These numbers support the possibility of a rate cut, weakening the U.S. dollar and offering some support to gold prices.
Geopolitical Dynamics and Central Bank Policies
Geopolitical tensions, especially hopes for a Gaza ceasefire, declared by President Joe Biden, have influenced gold prices. This agreement has prevented a steep decline in gold, despite positive sentiment in the stock markets limiting significant gains.
China’s Caixin Manufacturing PMI rose to 51.7 in May, boosting investor confidence. However, traders remain cautious, awaiting critical U.S. economic data, including the Nonfarm Payrolls (NFP) report set for release on Friday.
Short-Term Gold Price Forecast
Gaza Ceasefire Boosts Gold Prices are expected to stay under pressure, lingering below $2,320, due to optimism around the Gaza ceasefire. This development reduces gold’s safe-haven status. Additionally, easing inflation and potential rate cuts by the Federal Reserve contribute to the bearish sentiment.
Technical Analysis: Gold Price Outlook
Currently, gold (XAU/USD) is trading at $2,320.89, showing a slight 0.05% drop in the 4-hour chart. Key price levels to watch include a pivot at $2,325.52, with resistance levels at $2,335.22, $2,351.05, and $2,366.43. On the downside, support lies at $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, while the 200-day EMA stands at $2,353.07. If the price breaks below the upward trendline at $2,325, it could trigger a downward move toward $2,310 or lower. The overall sentiment remains bullish above $2,325, but a drop below this level may lead to significant declines.
Conclusion
The ongoing ceasefire discussions in Gaza, coupled with economic data pointing towards potential interest rate cuts, continue to shape gold prices. While gold remains resilient, the $2,320 mark serves as a critical resistance level. Investors should monitor geopolitical developments and upcoming U.S. economic reports to gauge future price movements.
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