During Wednesday’s Asian trading hours, the price of gold, known as XAU/USD, caught the attention of some buyers. This interest could be because of the demand for safe-haven assets, driven by tensions in geopolitics and uncertainty. Additionally, ongoing purchases of gold by central banks might also be contributing to its rise in value.
However, there’s a possibility that the positive momentum in gold could be slowed down by comments from Federal Reserve (Fed) officials. These remarks, which are leaning towards a more aggressive stance on monetary policy, might lessen hopes for potential interest rate cuts in 2024. This is despite the fact that the US employment reports for April were weaker than expected.
As a result, these factors might put pressure on the price of gold, causing it to decrease.
Later on Wednesday, three officials from the Federal Reserve – Philip Jefferson, Susan Collins, and Lisa Cook – are scheduled to speak. Their comments could be “hawkish,” meaning they might signal a more aggressive stance on monetary policy. This could strengthen the US dollar and put pressure on gold prices, which are denominated in USD. Gold traders will also be watching for the consumer sentiment reading from the University of Michigan on Friday for further insights.
Daily Digest Market Movers: Gold Prices Hold Steady Amid Uncertainty
- Neel Kashkari, President of the Minneapolis Fed, said it’s too early to say inflation is slowing down. He mentioned the Fed might cut interest rates later this year if inflation eases.
- Thomas Barkin, President of the Richmond Fed, thinks the current interest rates are high enough to cool down the economy and bring inflation back to the target of 2%.
- Financial markets think there might be about 50 basis points (bps) of interest rate cuts by the Fed this year. There’s a 65.7% chance of a 25 bps rate cut in September, according to CME’s FedWatch Tool.
- On Friday, the University of Michigan will release the preliminary Consumer Sentiment Index, which is expected to decrease from 77.2 in April to 76.0 in May.
- Israeli troops attacked Gaza’s southernmost city, despite a ceasefire proposed by Hamas on Monday. Israel rejected the proposal, saying it didn’t meet their demands, according to the New York Times.
- The People’s Bank of China (PBoC) added 60,000 troy ounces of gold to its reserves in April, marking 18 months of consecutive gold purchases.
Technical Analysis: Gold Price Shows Positive Outlook in the Long Run
The price of gold is doing well today. Looking ahead, the long-term outlook for gold remains positive because the XAU/USD is above an important moving average and is moving upward.
In the short term, though, gold has been moving within a downward trend since mid-April. This slight downward trend is confirmed by a certain technical indicator called the Relative Strength Index (RSI).
If the price of gold continues to fall, it might reach $2,300 first. If it goes below this, the next target could be around $2,260. If it breaks even lower, it might reach levels from early April around $2,228, and then possibly the $2,200 mark.
On the other hand, if gold prices rise, the first obstacle could be around $2,232. After that, there’s another challenge around $2,350–$2,355. If gold manages to surpass these levels, it might aim for $2,400 and even reach an all-time high near $2,432.
Today’s US Dollar Exchange Rate
“Percentage Change of US Dollar (USD) Against Major Currencies Today”
The table below displays how much the US Dollar (USD) changed compared to other major currencies today. Notably, the US Dollar was the weakest against the Swiss Franc.
The Heat Map Explained: Understanding Percentage Changes of Major Currencies”
In the heat map, you’ll see how much major currencies have changed in percentage compared to each other. The base currency is chosen from the left column, and the quote currency is chosen from the top row. For instance, if you select the Euro from the left column and look across to the Japanese Yen, the number shown in the box will tell you how much the Euro (as the base currency) has changed against the Japanese Yen (as the quote currency).
