Gold Technical Analysis: Breaching the General Trend

For four trading sessions in a row, the XAU/USD gold price is moving in an upward retracement path, with gains that affected the $1941 resistance level, its highest in three weeks. It is stable near it at the time of writing the analysis, at a time when the markets are awaiting the announcement of important US inflation numbers. The numbers will have a strong reaction on the price of the US dollar and, accordingly, on the gold market.

Overall, the yellow metal has struggled to regain any momentum since hitting record highs last spring. The path for gold prices is still not clear, and it could head towards the $1900 level for the rest of the year. With the recent gains, gold prices are heading for a weekly gain of 0.1% and remain up by 5.5%. In the same way, silver prices, the sister commodity to gold, rose above the level of $23 an ounce. In general, the price of the white metal increased by 1% in the past week, to reduce its decline since the beginning of the year 2023 to date, to less than 3.5%.

US inflation is expected to hit its lowest level in more than two years in a highly anticipated report due out on Wednesday – a slowdown that, if sustained, could prompt the Federal Reserve to halt interest rate hikes later this year.

The monthly report from the government is likely to show that US consumer prices rose just 3.1% in June from the 12 months before that, according to a survey of economists by data provider FactSet. The low number marks the lowest year-on-year increase since March 2021, when the current bout of painfully high inflation began as the economy emerged from a pandemic recession. It would point to a sharp slowdown from the 4% annualized rise in May. On a monthly basis, economists estimated that prices rose 0.3% from May to June, up from 0.1% in the previous month. Gas prices are expected to rise, with grocery prices unchanged. Economists predicted used car prices would decline from May to June after two months of sharp increases.

The Fed will almost certainly raise the key short-term interest rate again when it meets in two weeks. It halted its hikes last month after 10 consecutive rate hikes starting in March 2022. Central bank officials have indicated that they may raise interest rates again when they meet next September. But some economists have indicated that if inflation continues to slow and the economy shows enough signs of slowing, the July increase could be the Fed’s last hike.

• According to the performance on the daily chart below, despite the gains of the recent rebound in the XAU/USD gold price, it is struggling to breach the downside trend.
• This may happen if the bulls succeed in overcoming the $1955 and $1970 barriers, respectively.
• Expectations will increase for the future of the psychological resistance of $2000 an ounce again.

On the downward front, the psychological support at $1,900 an ounce still haunts bears, and this may happen if US inflation numbers come out stronger than expectations and support the path of tightening US Federal Reserve policy.

Ready to trade our Gold forecast? We’ve shortlisted the best Gold brokers in the industry for you.