On Tuesday, the price of gold, measured in XAU/USD, dropped by around one-third of a percent. It was in the range of $2,310s. This happened because the US dollar strengthened, making gold less expensive. Gold is priced in US dollars, so when the dollar gets stronger, it takes fewer dollars to buy gold, hence lowering its cost.
Gold Price Falls as Dollar Strengthens
On Tuesday, the price of gold went down because the US dollar got stronger, making gold cheaper when measured in dollars. Even though recent data on US jobs showed a weaker job market, which hinted that the Federal Reserve might lower interest rates sooner, comments from Fed officials in the past few days suggest they’re not in a rush to do so.
On Monday, Richmond Fed President Thomas Barkin mentioned that the current level of interest rates should help slow down the economy, bringing inflation closer to the Fed’s target of 2.0%. However, he also said that reaching this target might take some time and effort. He compared it to a stubborn road, suggesting that it won’t be easy, but it’s possible.
On the other hand, New York Fed President John Williams talked about how there would likely be cuts in interest rates eventually. He noted that he sees job growth slowing down, but the Fed would carefully examine all the available data before making any decisions.
According to FXStreet’s Editor Lallalit Srijandorn, the financial markets are expecting the Fed to cut interest rates by a total of 46 basis points (bps) by the end of 2024. They anticipate the first cut to happen around September or November.
Gold Price Faces Resistance at Upper Range: A Technical Analysis
The price of gold, measured as XAU/USD, recently went up to about $2,326 but then went back down. Right now, it’s getting support at around $2,317, which is close to the 50 Simple Moving Average (SMA) on the 4-hour chart.
XAU/USD 4-Hour Chart Analysis
The price might go down even more and drop to around $2,280, reaching the bottom of its recent range. However, it might find support from the 200 SMA and previous lows at around $2,300, which could make it harder for the price to keep falling.
Alternatively, if the price breaks above the top of the range decisively, it could signal a move upwards to a target of about $2,353. This target is calculated based on the top of wave B and a certain mathematical measure called the Fibonacci extension. If things are really positive, the price could even go up to around $2,370.
A decisive break means the price makes a big move, like a longer-than-average green candlestick that goes above the range ceiling and closes near its highest point. It could also happen if there are three green candlesticks in a row that all go above the range ceiling.
Unfinished Measured Move: What it Means for Trading
The gold price might still be following a pattern called a “Measured Move” that started on April 19. This pattern typically has three parts, labeled A, B, and C. Right now, the price has fallen to what’s called a “conservative estimate” for the length of wave C, which is at $2,286. This level is based on a certain mathematical measure called Fibonacci.
But wave C could keep going down even more, possibly reaching $2,245, which is the full length of wave A. We’d know this is happening if the price breaks decisively below a certain range and goes below the low point from May 3, which was at $2,277.
