#Gold Technical Analysis# 24K99 news: in early European trading on Friday (June 28th), spot gold traded near $2325 / ounce. Dhwani Mehta, a senior FXStreet contributor, analyzed and predicted the technical trend of gold price in her latest article on Friday.
Mehta pointed out that investors are currently waiting for the US PCE inflation data, and the fate of gold prices depends on the performance of this top-tier US data. The downside risk of gold remains intact.
US PCE data may cause violent fluctuations in the gold market.
At 20:30 on Friday Beijing time, the US May personal consumption expenditure (PCE) price data will be released, and violent fluctuations are expected to occur in the gold market after the data is released.
Mehta said that before the US PCE inflation data was released, gold traders became cautious and avoided making new bets.
According to a survey by authoritative media, the US May PCE price index is expected to grow by 2.6% year-on-year, compared with 2.7% growth in April.
In terms of more critical core data, the survey shows that the US May core PCE price index is expected to rise by 2.6% year-on-year, down from 2.8% in the previous value.
As the most favored inflation indicator of the Fed, the year-on-year change of core PCE price index has a greater impact on policy makers.
Mehta said that if the inflation data shows a slowdown in price pressures, gold prices may regain momentum, because the US dollar will face strong selling pressure due to increased market bets on a rate cut in September. On the contrary, if the inflation data unexpectedly rises, the US dollar may continue its recent rise and put pressure on gold prices.
According to CME's "Fed observation tool", the market currently expects a probability of about 64% for a rate cut by the Fed in September, slightly higher than Thursday's 62%.
How to trade gold?
Spot gold closed up $29.26 on Thursday, up 1.27% at $2327.30 an ounce.
Mehta said that although the price of gold rebounded, the downside risks remain intact as the relative strength index (RSI) is still below the 50 level on the 14th. Therefore, any rebound in gold prices will continue to provide good selling opportunities.
The bearish crossover of the 21-day moving average (SMA) and the 50-day SMA last week continued to play against the wind, increasing the credibility of the bearish potential.
Mehta pointed out that if sellers expand control, the key level of $2300 / ounce will be tested again. Once it breaks through this level, the June low of $2287 / ounce may save buyers.
If gold continues to decline, the May 3 low of $2277 / ounce will become the target of sellers.
(Spot gold daily chart source: FXStreet)
On the other hand, Mehta added that the gold price needs to break through the 21-day moving average of $2328 / ounce at the daily closing to restore the recovery trend from the monthly low of $2287 / ounce. If the gold price continues to rise, the bulls will target the 50-day moving average of $2338 / ounce, followed by the two-week high of $2366 / ounce.
At 15:33 Beijing time, spot gold reported $2325.05 / ounce.