#Gold Technical Analysis# 24K99 News On Monday (June 24th), spot gold moderated rebounded after a sharp drop of nearly $40 in the previous trading day and is currently trading near $2326/ounce. FXStreet analyst Haresh Menghani wrote the latest analysis of the gold price trend on Monday.
Menghani pointed out that the gold price attracted some buyers, partially reversing the trend of slipping from two-week highs last Friday. The bet on the Fed's rate cut in September and geopolitical risks provided some support for gold. However, the rising US dollar to its highest level since May 9th is a headwind for gold.
Last Friday, because S&P Global released data showing that US June PMI data was better than expected, the US dollar strengthened that day and the gold price plummeted.
The data showed that the US June S&P Global Manufacturing PMI preliminary was 51.7, expected 51, prior 51.3. The Service PMI preliminary was 55.1, expected 53.7, prior 54.8. The Composite PMI preliminary was 54.6, expected 53.5, prior 54.5. This is the highest level since April 2022, and May was 54.5.
Spot gold plummeted $38.29, or 1.63%, to close at $2321.64 per ounce last Friday.
Gold traders this week focus on US PCE data
Menghani wrote that last Friday's stronger-than-expected US PMI data shows that the US economy is still resilient. In addition, earlier this month, the Fed unexpectedly announced that it expects to cut interest rates only once in 2024, which will continue to support the US dollar and limit any meaningful rise in gold prices. Before this week's release of the final US Q1 GDP and PCE price index, traders may be more willing to leave the market and wait for new directional bets.
FXStreet analyst Eren Sengezer pointed out that there will be no high-impact data released in the US economic calendar that may have a major impact on gold this week. Therefore, investors will continue to pay attention to the headline news surrounding the Middle East conflict. Further escalation of geopolitical tensions may give gold a bullish trend.
On Thursday, the Bureau of Economic Analysis (BEA) will release the final value of the first quarter GDP. On Friday, the Bureau of Economic Analysis will release the PCE price index data for personal consumption expenditure (PCE), which is the Fed's preferred inflation gauge for May.
Economists predict that the US May PCE price index is expected to remain flat, with a rise of 0.3% in April. The US May PCE price index is expected to increase by 2.6% on an annual basis, compared to a growth of 2.7% in April. The US May core PCE price index is expected to increase by 0.1%, compared to a rise of 0.2% in April; the US May core PCE price index is expected to climb 2.6%, compared to a rise of 2.8% previously.
Sengezer said that investors may react to core PCE inflation data, which excludes volatile commodity prices such as food and energy and is not distorted by base effects. In April, the core PCE price index rose by 0.2% compared to the previous month. If the May data is 0.2% or lower, it may reignite expectations for a Fed rate cut in September and cause selling pressure on the US dollar. On the other hand, if the data reaches 0.3% or higher, it may trigger a rebound in US Treasury yields and force gold prices to weaken over the weekend.
How will gold perform this week? Pay attention to these important supports and resistances
Haresh Menghani pointed out that from a technical point of view, the gold price fell after failing to break through the 50-day simple moving average (SMA) resistance level last Friday. However, the subsequent decline was stagnant in front of the rising trendline support level for two weeks. The support level is now around $2312/ounce, which should be a key level now.
Menghani said that since the oscillating indicators on the daily chart have just started to fluctuate in the negative zone, if the gold price falls below the above support level, it will make it easier for the gold price to fall below the $2300/ounce mark and retest the monthly volatility low point near $2285/ounce.
Some subsequent selling will be regarded as a new trigger by bearish traders, targeting the 100-day moving average support level near $2247-2246/ounce. The downside trajectory may further extend to the support level of $2225-2220/ounce, and then the gold price may eventually fall to the integer mark of $2200/ounce.
On the upside, Menghani added that the 50-day moving average (currently near the $2341-2342/ounce area) may form a strong barrier, and the next resistance is the high level of oscillation last Friday (near the $2368-2369/ounce area).
Some subsequent buying may push the gold price towards the hurdle of $2387-2388/ounce, and then advance to the integer mark of $2400/ounce.
Menghani said that if the gold price continues to strongly break through $2400/ounce, this will dispel the bearish prospects in the short term and allow the gold price to re-target the historical peak, which is near the $2450/ounce mark touched in May.
At 12:17 Beijing time, spot gold was reported at $2326.04/ounce.