Gold (XAU/USD0 Prices Delicately Poised Heading into Blockbuster Week

Gold prices, charts and analysis:

gold Prediction: neutral

Read more: The Bank of Canada swings higher 25 pips per second and slices USD/CAD

It seems that gold prices are about to end the week higher, however this move can be described as not convincing. The precious metal fluctuated between the $1940 and $1970 handles for most of the week as the ongoing repricing of prospects for a US Federal Reserve interest rate hike weighed on gold’s recovery attempts.

The biggest shock to the markets this week was by the Reserve Bank of Australia and the Bank of Canada who surprised the markets by raising 25 basis points each due to persistent concerns about price pressures. This has left market participants pondering the prospect of a hot CPI reading from the US on Tuesday, a day before the Federal Reserve’s interest rate decision. A hot CPI reading could complicate things further for the Fed and may add more uncertainty ahead of the meeting. Will the Fed follow the RBA and BoC and raise the rate now or will they go the ‘hawkish’ pause path?

Next week, the US CPI and FOMC meeting dominates

From a volatility perspective, the market participants will undoubtedly welcome the heavy economic earnings in the coming week. The Fed remains quite divided on the way forward, as there will likely be intense debate and discussion about whether a pause or another 25bp increase is needed. There have been small signs recently that the economy may be starting to slow down, but wage growth held steady at 0.3% as the unemployment rate picked up during the month of May. However, the NFP print shattered estimates on what the Fed hawks are likely to use as ammunition heading into Wednesday’s meeting. A significant outperformance from estimates released by US CPI data could lead to a possible rally and start of dollar bids ahead of the FOMC meeting which could hinder gold prices’ attempt to rally towards $2000.

CPI basic historical data

Source: DailyFX

Although US data will dominate next week’s actions, we also have retail sales data from China. As the uncertainty over the Chinese economy continues, these numbers could also stoke recession fears again and could see the safe haven appeal return which could help the precious metal as it looks to make its way higher.

All things considered, it is shaping up to be a pivotal week for the markets as a whole, while the impact on the US dollar in particular could have longer term implications for gold prices and provide some form of direction.

Economic calendar for the next week

The next week on the calendar is simply bubbly to say the least with a bunch of central bank meetings leading the way. However, we’re focused on US and Chinese data in particular and on that front, we have five “high” rated data releases, and a slew of “medium” rated data releases on the spreadsheet.

Here are the five “rated” high-risk events for the coming week in the economic calendar that could affect gold prices:

For all the economic data and events that move the market, see DailyFX calendar

artistic look

The weekly chart of XAUUSD appears to be on its way to printing a closing doji which would be appropriate given the indecision we have seen for the majority of the week. It seems that the weekly candlestick is preparing to close above the $1950 resistance level that has turned into a support area. Many of the moves we’ve seen this week haven’t been tracked due to the low volatility in the markets and it will be interesting to see if we look like price action should liquidity return.

XAU/American dollar Weekly Chart – June 9, 2023

Source: TradingView

Slope to the daily time frame and we can see the indecision this week closely with a bearish engulfing candle immediately followed by a bullish engulfing candle close. The price is still stuck between the 50 and 100 day MA with the latter providing support twice this week around the $1940 handle.

Heading into the new week, the range between $1940 and $1970 remains key as a break in either direction could lead to an accelerated rise towards key support or resistance levels. Any upward break of the $1970 handle would have to contend with the 50 day EMA at $1990 before attempting again at the psychological $2000 level.

A break-down of the $1940 support and the 100 day EMA could send gold prices free falling as we have little immediate support until the $1900 level. Given the mixed price action of late, it’s hard to side with bias from a technical standpoint while continued indecision around the FOMC meeting and uncertainty around the global macro picture leaves me on the sidelines as we begin what promises to be a booming week.

XAU / USD Daily chart – June 9, 2023

Source: TradingView

Written by: Zain Fouda, market writer for DailyFX.com

Connect with Zain and follow her on Twitter: @tweet