Outlook for gold prices:
- gold prices A modest retreat heading into the weekend, however, is undermining it U.S. dollar strength and rising american revenues
- Despite the precious metal’s poor performance this week, the medium-term outlook remains positive
- This article discusses the key technical levels to watch on XAU/American dollardaily chart
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Gold was on the decline on Friday, down about 0.2% to $2,010, declining for the third consecutive session, affected by the rise in US Treasury bond prices, along with the strength of the US dollar in the foreign exchange space, but losses were largely contained – a sign that speculators are The bulls have no intention of bailing out yet despite the metal’s poor performance for most of the week.
The jump in yields coincided with the release of the US University of Michigan poll, which showed a measure of consumer attitudes falling to a six-month low of 57.7 in May, but the bond market may be driven by a rise in average. Term inflation expectations, with the 5-year index rising to 3.2% from 3.0% previously.
University of Michigan Sentiment Data
source: DailyFX Economic Calendar
University of Michigan inflation expectations tend to be volatile, so this month’s results may not be a cause for concern or fundamentally alter the Fed’s monetary policy outlook, especially after April’s CPI and PPI data revealed a further dip in pressure. the prices. Against this backdrop, the FOMC’s argument for tightening at the June meeting remains strong.
Historically, once the Fed officially hits the pause button, nominal yields start sliding along the curve over the following months. This could be bullish for gold, especially if prices re-price it to fall materially. With the US economy heading into a possible recession later this year, it is not hard to anticipate that scenario playing out, boosting precious metals along the way.
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Technical analysis of gold
While gold maintains its bullish profile, a period of consolidation should not be ruled out after the huge rally already observed since early March. This means that prices can remain trapped in a narrow range until new clues emerge to encourage more buying.
In terms of the main technical thresholds to watch, the first support to watch is near the psychological $2000 level. While the bulls are likely to defend this floor, a sustained decline below it could lead to a pullback towards $1,975. On a downward move, a deeper decline towards $1920 should not be ruled out.
In case of an upward turn, the initial resistance is seen at $2050. If the bulls can take this cap off, the bulls may become emboldened to launch an attack at the highs of 2023.