Gold price (XAU/USD) maintains a positive trajectory on Thursday, supported by the absence of significant economic data releases mid-week. Nevertheless, several factors, including a stronger US Dollar (USD) and hawkish statements from the US Federal Reserve (Fed), are likely to limit the precious metal’s upward potential in the short term.
Conversely, the surge in global gold demand was primarily fueled by robust investment in the over-the-counter market, consistent central bank acquisitions, and increasing demand from Asian markets, particularly China and India, as outlined in the latest report from the World Gold Council (WGC). Additionally, the prevailing risk-averse sentiment and uncertainties surrounding geopolitical tensions in the Middle East could elevate the appeal of traditional safe-haven assets like gold.
Gold traders are anticipating new developments. The US weekly Initial Jobless Claims report is scheduled for Thursday, along with a speech from San Francisco Fed President Mary Daly, known for her dovish stance within the US central bank. Any dovish comments from Federal Reserve officials could limit the potential downside of gold prices in the interim.
Daily Digest Market Movers: Gold Price Holds Firm Despite Numerous Challenges
Boston Fed President Susan Collins stated that it will take longer than previously anticipated to lower inflation to the 2% target, highlighting the likelihood of the rate staying elevated for an extended period. Additionally, New York Fed President John Williams and Minneapolis Fed President Neel Kashkari indicated their preference for maintaining current interest rates for a longer duration.
Investors have adjusted their expectations, with a decrease in the probability of a quarter-percentage-point rate cut by the Fed in September to nearly 55%, down from 85% before the release of the US employment report last week, according to CME’s FedWatch Tool.
The initial reading of the University of Michigan Consumer Sentiment Index is anticipated to decline from 77.2 in April to 76.0 in May.
Israeli Prime Minister Benjamin Netanyahu mentioned that Hamas has accepted a preliminary ceasefire proposal, although it falls short of meeting Israel’s requirements.
In April, the People’s Bank of China (PBoC) increased its gold reserves by 60,000 troy ounces, extending its streak of consecutive monthly purchases to 18 months.
Technical Analysis: Gold Price Maintains Bullish Sentiment in the Long Term
The gold price has inched upwards today. Looking at the longer-term perspective, the outlook for the yellow metal remains optimistic, with XAU/USD trading above the crucial 100-day Exponential Moving Average (EMA) on the daily chart.
However, in the short term, gold has been moving within a descending trend channel since mid-April. The market is currently consolidating, reflected in the 14-day Relative Strength Index (RSI) hovering around the 50-midline.
The initial support level for gold is approximately at the psychologically significant $2,300 mark, followed by the lower boundary of the descending trend channel at $2,260. If selling pressure persists, XAU/USD could decline further to reach the April 1 low of $2,228, with the next significant level being the $2,200 mark.
Conversely, if demand for gold strengthens, the yellow metal could rally to reach the May 6 high of $2,232. Further upwards movement may attract more buyers, potentially testing the upper boundary of the descending trend channel at $2,345. A break above this level could pave the way for a move towards the psychologically important $2,400 mark, eventually targeting the all-time high near $2,432.
Today’s US Dollar Price Update
The following table illustrates the percentage fluctuations of the US Dollar (USD) against various major currencies today. Among these, the US Dollar exhibited its lowest performance against the Canadian Dollar
The heat map displays the percentage variations of major currencies relative to each other. In this representation, the base currency is selected from the left column, while the quote currency is chosen from the top row. For instance, if you select the Euro from the left column and follow the horizontal line to the Japanese Yen, the percentage change indicated in the respective box represents the EUR (base)/JPY (quote) exchange rate.
