After an impressive rebound in the first quarter of 2023, gold prices appear to be in a bull market. XAUUSD price is up more than 8% since the beginning of the year. This is an impressive recovery after a slow 2022, which was challenged by steep interest rate increases.
gold Prices have slowly declined after making a third high of 2048.61 in April and since then have been trading flat with points of interest at the psychological level of 2000.00. In Monday’s trading (01/05), XAUUSD tested the important level again, but closed lower at 1982.21 after stronger PMI and ISM Manufacturing data.
The US ISM Manufacturing PMI rose to 47.1 in April 2023 from a three-year low of 46.3 the previous month and slightly above the market consensus of 46.8. However, the latest reading showed that economic activity in the manufacturing sector contracted for the sixth month in a row, as higher borrowing costs and tightening credit led to a decline in activity and increased recession risks this year. The employment rate has stabilized after two periods of decline (50.2 vs. 46.9). The survey also indicated faster deliveries and shorter lead times from suppliers. On the price front, input costs rose again in April after falling slightly the previous month.
The 10-year US Treasury yield rose to 3.55%, near a one-month high of 3.6% from April 16, amid evidence of rising inflation and easing concerns about turmoil in the banking sector. JPMorgan has agreed to take over First Republic Bank’s assets and take its deposits in a government-led deal, ending the risks that distressed lenders pose to the financial system and reducing demand for US Treasury bonds.
PMI data from ISM and S&P showed that inflationary pressures accelerated in April. The market fully agrees that the Federal Reserve will raise interest rates by 25 basis points this week, and swap rates suggest that investors are reconsidering bets that the central bank will continue to cut rates this year.
Technical review
HAUUSD – The momentum varied and the gold’s rise weakened during the month of April, as gold reached a peak of 2048.61. A break of 1969.14 support is expected, and a downward movement of FE61.8 from 2048.61-1969.14 and 2012.31 at 1963.20, while support and resistance areas around +/- 1950.00 will be an important focus point, as these price levels are crucial. Moving below this level, gold prices are expected to reach the 100 FE at 1932.84. As long as +/- 1950.00 holds steady, the outlook for gold prices in May is likely to consolidate. On the upside, breaking the resistance of 2012.31, then the possibility of testing the recent top is open again.
In the H8 period, it was HAUUSD The price appears to be forming a symmetrical triangle pattern between the 26 EMA, while the MACD histogram bars tend to get thin in the sell zone, showing no increase in momentum so far. It seems that the market is still waiting for some important monetary decisions and data that will happen this week.
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Eddie Fangisto
Market Analyst – HF Education Office – Indonesia
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