Published on Jun 19, 2023

Daily Analysis For GOLD (XAU/USD) 19-06-2023

Gold (XAU/USD) Analysis

Key Points: -

· The price of gold continues its decline from the previous day, pushing towards a significant confluence of exponential moving averages (EMA) around the $1,955-54 range.

· Concerns surrounding slower economic growth in China and the hawkish signals from the Federal Reserve are weighing on the XAU/USD pair.

· However, the observance of the Juneteenth holiday and mixed economic data from the US are providing some support to the Gold Price, especially in the midst of a sluggish start to the key week.

· Market participants are eagerly awaiting Fed Chair Powell's bi-annual Testimony and the release of PMIs for clearer guidance and direction.

Today's Scenario: -

The Gold Price (XAU/USD) is facing downward pressure due to market pessimism surrounding China and renewed hawkish concerns from the Federal Reserve (Fed), with prices touching the intraday low near $1,954 during early Monday trading in Europe.

The negative sentiment towards the XAU/USD can be attributed to recent reports of multiple banks lowering China's growth forecasts, which has dampened market risk appetite and weighed on the price of gold. Similarly, hawkish comments from Fed policymakers and the central bank's latest report to Congress have contributed to the bearish sentiment.

Richmond Fed President Thomas Barkin expressed caution about raising rates further, highlighting the risk of a significant economic slowdown. However, Barkin also acknowledged that the Fed has the ability to implement measures to manage the resilient US economy. These remarks, along with similar comments from Chicago Fed President Austan Goolsbee and Federal Reserve Governor Christopher Waller, have supported a rebound in the US Dollar (DXY) from multi-day lows.

Additionally, the Fed's Monetary Policy Report to the US Congress, published on Friday, emphasized that inflation in the US is currently well above the target and that the labor market remains tight, according to Reuters.

On the other hand, positive news from the South China Morning Post (SCMP), quoting the China State Council, has sparked optimism at the beginning of the week. The report suggests that China plans to implement more stimulus measures, which provides some support to the Gold Price. Furthermore, there are indications that tensions between the US and China are easing, as diplomats from both nations engage in "candid and constructive talks" to address their differences, including issues related to Taiwan and trade, as reported by Reuters.

Looking ahead, with a light economic calendar and the holiday in the US stock and bond markets, the movements of the Gold Price may be limited. However, market participants will closely monitor Fed Chairman Powell's bi-annual testimony and the release of PMIs for June, as these events will provide important signals and guidance for the future direction of gold prices.

Diagram of XAU/USD (Gold): -

Economic Events: -

Date Event Impact Currency

04:00 (New Zealand) Services NZ PSI Low NZD

04:00 (New Zealand) Composite NZ PCI Low NZD

05:30 (United States) Juneteenth None USD

09:05 (Japan) 52-Week Bill Auction Low JPY

13:30 (Australia) Myfxbook AUDUSD Sentiment Medium AUD

13:30 (Switzerland) Myfxbook USDCHF Sentiment Medium CHF

13:30 (Japan) Myfxbook USDJPY Sentiment Medium JPY

13:30 (European Union) Myfxbook EURUSD Sentiment Medium EUR

13:30 (United Kingdom) Myfxbook GBPUSD Sentiment Medium GBP

13:30 (Canada) Myfxbook USDCAD Sentiment Medium CAD

13:30 (New Zealand) Myfxbook NZDUSD Sentiment Medium NZD

13:30 (Euro Area) ECB Survey of Monetary Analysts Low EUR

15:00 (Germany) 12-Month Bubill Auction Low EUR

16:00 (Portugal) Current Account Low EUR

16:30 (Euro Area) ECB Lane Speech Low EUR

17:10 (Euro Area) ECB Schnabel Speech Low EUR

18:00 (Canada) PPI YoY Low CAD

18:00 (Canada) PPI MoM Low CAD

18:00 (Canada) Raw Materials Prices YoY Low CAD

18:00 (Canada) Raw Materials Prices MoM Low CAD

18:30 (France) 3-Month BTF Auction Low EUR

18:30 (France) 12-Month BTF Auction Low EUR

18:30 (France) 6-Month BTF Auction Low EUR

19:30 (United States) NAHB Housing Market Index Medium USD

23:30 (Euro Area) ECB Guindos Speech High EUR

Buy Scenario: -

On the upside, there are resistance levels that could limit the immediate upward movement of the gold price. These levels include the Fibonacci 38.2% retracement on the weekly chart, the previous daily high, and the upper band of the Bollinger Bands on the 15-minute chart, all located near $1,961-62.

Beyond that, the Fibonacci 38.2% retracement on the one-month chart, around $1,968, will act as another obstacle for the XAU/USD bulls before potentially giving them control. Till we did not advise to buy XAU/USD.

Selling Scenario: -

As a result, buyers of XAU/USD may maintain their optimism unless there is a clear break below the horizontal support zone that has been in place for the past two weeks, located around $1,940-38. Even if the bears manage to breach the support confluence at $1,954, the buyers could still find support.

On the upside, a break above the aforementioned resistance line near $1,965 could quickly propel the buyers towards the monthly high around $1,983, with further potential for a rally towards the psychological magnet of $2,000. We do not advise selling XAU/USD.