Daily Analysis For GOLD (XAU/USD) 25-05-2023

Daily Analysis For GOLD (XAU/USD) 25-05-2023

Gold (XAU/USD) Analysis
Key Points
• The price of gold remains at a lower level, testing the lower boundaries of a significant trading range in the short term.
• The strengthening yields of US Treasury bonds and the stability of the US Dollar limit the demand for gold (XAU/USD) as a safe-haven asset during uncertain market conditions.
• Mixed sentiments regarding the US debt ceiling deal and the Federal Reserve's actions impose restrictions on the movements of the gold price.
• Market participants are closely observing US economic data and potential risk factors that could provide clearer indications and guidance. US negotiators are preparing for an extended weekend, which adds to the cautious sentiment.

Today's Scenario: - The price of gold (XAU/USD) is experiencing a lack of clear direction as buyers and sellers contend near a significant short-term support level, approaching the $1,955 mark as Thursday's European session unfolds. This indicates the market's uncertainty amidst conflicting signals surrounding the negotiations on extending the US debt limit and the actions of the US Federal Reserve (Fed). Additionally, traders of XAU/USD are likely to be influenced by a cautious sentiment ahead of upcoming mid-tier data releases from the US.
The inability of US policymakers to reach an agreement on extending the debt ceiling, coupled with the impending long weekend for the House of Representatives, has increased concerns about a potential US default, despite signs of progress in the latest negotiation rounds. Consequently, global rating agencies like Fitch and Moody's have adopted a cautious stance on the US credit rating, a sentiment that has been acknowledged by the US Treasury Department.
Meanwhile, the Minutes of the recent Federal Open Market Committee (FOMC) meeting indicate a division among policymakers regarding the recent 0.25% interest rate hike by the US central bank. This uncertainty has led to doubts in the market about the likelihood of another rate hike in June. However, Atlanta Fed President Raphael Bostic noted that the country is just beginning the challenging phase of managing inflation. Similarly, Federal Reserve Governor Christopher Waller expressed his support for continuing rate hikes unless there is clear evidence that inflation is moving towards the 2% target.
On another note, the market's anticipation of further easing measures from China, evidenced by record-high interbank Repo turnover, contrasts with geopolitical concerns, creating challenges for movements in the price of gold.
Reflecting the overall sentiment, the S&P 500 Futures have halted a two-day downtrend, rebounding from a two-week low to reach 4,138 at the time of writing, representing a 0.39% intraday increase. Meanwhile, the yields of the US 10-year and two-year Treasury bonds remain relatively strong, hovering near their highest levels since mid-March, at approximately 3.75% and 4.40% respectively.
Looking ahead, the market will be closely monitoring key events such as the US weekly Jobless Claims, the Chicago Fed National Activity Index, and Pending Home Sales. However, the outcome of the debt ceiling talks will be crucial in providing clearer directions for market participants.

Diagram of XAU/USD (Gold)
XAU/USD (Gold)
Economic Events :-
00:01(United Kingdom) Car Production YoYLowGBP
00:50(Japan) Foreign Bond InvestmentLowJPY
00:50(Japan) Stock Investment by ForeignersLowJPY
01:00(Australia) RBA Payments System Board MeetingLowAUD
04:35(Japan) 40-Year JGB AuctionLowJPY
07:00(Germany) GDP Growth Rate QoQMediumEUR
07:00(Germany) GDP Growth Rate YoYMediumEUR
07:00(Germany) GfK Consumer ConfidenceHighEUR
07:45(France) Business ConfidenceMediumEUR
07:45(France) Business Climate IndicatorLowEUR
08:00(Spain) PPI YoYLowEUR
09:30(Slovenia) Tourist Arrivals YoYLowEUR
09:30(Slovenia) Business ConfidenceLowEUR
10:00(Euro Area) ECB Annual Report 2022LowEUR
10:00(Euro Area) ECB Guindos SpeechHighEUR
10:10(Italy) BTP Short TermLowEUR
11:00(United Kingdom) CBI Distributive TradesMediumGBP
11:00(Latvia) Unemployment RateLowEUR
12:00(Canada) CFIB Business BarometerLowCAD
13:30(Canada) Manufacturing Sales MoMLowCAD
13:30(United States) Jobless Claims 4-week AverageHighUSD
13:30(United States) Continuing Jobless ClaimsHighUSD
13:30(United States) Initial Jobless ClaimsHighUSD
13:30(United States) Chicago Fed National Activity IndexMediumUSD
13:30(United States) Real Consumer Spending QoQLowUSD
13:30(United States) GDP Sales QoQLowUSD
13:30(United States) Core PCE Prices QoQLowUSD
13:30(United States) PCE Prices QoQLowUSD
13:30(United States) GDP Price Index QoQMediumUSD
13:30(United States) Corporate Profits QoQMediumUSD
13:30(United States) GDP Growth Rate QoQMediumUSD
13:30(Canada) Average Weekly Earnings YoYLowCAD
15:00(United States) Pending Home Sales YoYMediumUSD
15:00(United States) Pending Home Sales MoMMediumUSD
15:30(United States) EIA Natural Gas Stocks ChangeLowUSD
15:30(United States) Fed Collins SpeechMediumUSD
16:00(United States) Kansas Fed Composite IndexLowUSD
16:00(United States) Kansas Fed Manufacturing IndexLowUSD
16:30(United States) 8-Week Bill AuctionLowUSD
16:30(United States) 4-Week Bill AuctionLowUSD
17:30(United Kingdom) BoE Haskel SpeechLowGBP
18:00(United States) 7-Year Note AuctionLowUSD
23:00(New Zealand) ANZ Roy Morgan Consumer ConfidenceLowNZD

Buy Scenario: - The price of gold is currently testing a week-old ascending support line around the $1,955 level, while it remains within a short-term trading range that has been established since May 16. The range is currently bounded by the levels of $1,985 and $1,951.
Despite this, there are some factors that support the buyers of XAU/USD, including the potential for a bullish crossover on the MACD indicator and the RSI (14) line currently being below the 50 level.
However, there are two key obstacles that may hinder immediate upward movements for the gold price. Firstly, there is a declining trend line that has been in place for about two weeks, situated around the $1,977 level. Additionally, the 200-Hour Moving Average (HMA) at approximately $1,981 may also act as a resistance level. Till we did not advise to buy XAU/USD.

Selling Scenario: - It's important to note that there are additional factors to consider in relation to the gold price. The late March swing low, located around $1,934, and the psychological level of $2,000 can serve as additional filters that could impact the movements of the gold price.
Overall, gold prices are consolidating recent gains in a market that lacks significant momentum. However, bearish sentiment persists among some market participants. We do not advise selling XAU/USD.

Support and Resistance Level: -
S1 1947.50-R1 1976.01
S2 1937.89-R2 1994.91
S3 1918.99-R3 2004.52


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