Published on May 26, 2023

Daily Analysis For GOLD (XAU/USD) 26-05-2023

Gold (XAU/USD) Analysis

Key Points

• The price of gold is currently experiencing a corrective bounce after a three-week downtrend. The cautious market sentiment surrounding the looming US debt ceiling expiry and the release of key US economic data has led to a retreat in the US Dollar, providing support for the bounce in XAU/USD (gold price).

• The bounce in gold is also influenced by the optimism surrounding upbeat US economic statistics and concerns about a hawkish stance from the Federal Reserve. Despite the ongoing drama surrounding the US debt ceiling, there are hopes that the US will avoid defaulting on its obligations, which has kept the bears hopeful in the gold market.

• It's important to note that the gold price has been in a downtrend for the past three weeks, indicating a period of selling pressure. However, the recent bounce suggests a temporary reversal of this trend. The market will continue to monitor developments related to the US debt ceiling and key US data, as they will likely impact the future direction of gold prices.

Today's Scenario: - The price of gold (XAU/USD) has managed to reduce its losses for the week and is currently trading at its lowest levels in two months. Market participants are eagerly awaiting key data releases from the US, as well as developments on the debt ceiling deal. The recent rebound in gold prices can be attributed to the retreat of the US Dollar from its multi-day peak. Reports suggest that policymakers are still facing significant differences in order to avoid a default on US obligations. This development has led to a slight weakening of the US Dollar and provided some support to the price of gold.

However, the outlook for gold remains under pressure due to the upward revisions in US Real GDP and activity data. These positive economic indicators have raised hopes of a more hawkish stance from the Federal Reserve, despite some mixed comments from officials in recent times. The anticipation of potential tightening of monetary policy by the Fed has exerted downward pressure on the price of gold.

Looking ahead, market movements in gold will depend on the progress of US debt ceiling negotiations, as the early June deadline approaches. Additionally, the release of US Durable Goods Orders for April and the Core Personal Consumption Expenditure (PCE) Price Index, which is the Fed's preferred measure of inflation, will be closely watched for further guidance on market direction.

Diagram of XAU/USD (Gold)

Economic Events :-

GMT	Event	Impact	Currency
00:30	(Japan) Tokyo Core CPI YoY	Low	JPY
00:30	(Japan) Tokyo CPI YoY	Low	JPY
00:30	(Japan) Tokyo CPI Ex Food and Energy YoY	Low	JPY
02:30	(Australia) Retail Sales MoM	High	AUD
04:35	(Japan) 3-Month Bill Auction	Low	JPY
06:00	(Japan) Leading Economic Index	Low	JPY
06:00	(Japan) Coincident Index	Low	JPY
07:00	(Lithuania) Retail Sales MoM	Low	EUR
07:00	(Lithuania) Retail Sales YoY	Low	EUR
07:00	(United Kingdom) Retail Sales ex Fuel MoM	High	GBP
07:00	(United Kingdom) Retail Sales ex Fuel YoY	High	GBP
07:00	(United Kingdom) Retail Sales YoY	High	GBP
07:00	(United Kingdom) Retail Sales MoM	High	GBP
07:30	(Switzerland) Non Farm Payrolls	Low	CHF
07:45	(France) Consumer Confidence	Medium	EUR
08:15	(Euro Area) ECB Enria Speech	Low	EUR
08:40	(Euro Area) ECB Lane Speech	Medium	EUR
09:00	(Italy) Consumer Confidence	Medium	EUR
09:00	(Italy) Business Confidence	Medium	EUR
09:00	(Austria) Bank Austria Manufacturing PMI	High	EUR
10:10	(Italy) 6-Month BOT Auction	Low	EUR
11:00	(France) Jobseekers Total	Low	EUR
11:00	(France) Unemployment Benefit Claims	Medium	EUR
11:00	(Luxembourg) Balance of Trade	Low	EUR
13:30	(Canada) Wholesale Sales MoM	Low	CAD
13:30	(United States) Goods Trade Balance	High	USD
13:30	(United States) Wholesale Inventories MoM	Medium	USD
13:30	(United States) Core PCE Price Index MoM	High	USD
13:30	(United States) Core PCE Price Index YoY	Low	USD
13:30	(United States) PCE Price Index MoM	Medium	USD
13:30	(United States) PCE Price Index YoY	Medium	USD
13:30	(United States) Personal Spending MoM	High	USD
13:30	(United States) Personal Income MoM	High	USD
13:30	(United States) Retail Inventories Ex Autos MoM	Medium	USD
13:30	(United States) Durable Goods Orders Ex Transp MoM	High	USD
13:30	(United States) Non Defense Goods Orders Ex Air	Low	USD
13:30	(United States) Durable Goods Orders MoM	High	USD
13:30	(United States) Durable Goods Orders ex Defense MoM	High	USD
15:00	(United States) Michigan Consumer Expectations	Low	USD
15:00	(United States) Michigan Current Conditions	Low	USD
15:00	(United States) Michigan 5 Year Inflation Expectations	Low	USD
15:00	(United States) Michigan Consumer Sentiment	High	USD
15:00	(United States) Michigan Inflation Expectations	Low	USD
16:00	(Canada) Budget Balance	Low	CAD
18:00	(United States) Baker Hughes Oil Rig Count	Low	USD
18:00	(United States) Baker Hughes Total Rig Count	Low	USD

Buy Scenario: - From a technical standpoint, if the price of gold continues to rise, it is likely to encounter strong resistance in the $1,970 to $1,980 range, which is a significant horizontal support level. If the price manages to sustain strength above this range, it could trigger a short-covering rally and push the gold price towards the psychological level of $2,000. However, it's important to note that further upward movement may still be viewed as an opportunity to sell, with resistance expected near the $2,010 to $2,012 supply zone. Till we did not advise to buy XAU/USD.

Selling Scenario: - On the downside, bearish traders may wait for a sustained break below the 100-day Simple Moving Average (SMA), currently around the $1,935 area, before entering new short positions. Such a break would indicate a continuation of the recent downward correction from the all-time high reached earlier this month and could potentially push the gold price towards the round-figure support level of $1,900. We do not advise selling XAU/USD.

Support and Resistance Level: -