During Monday’s Asian session, gold prices (XAU/USD) experienced a downturn, influenced by hawkish statements from the Federal Reserve (Fed) and speculation regarding a potential delay in easing plans, consequently bolstering the US dollar and pulling down USD-denominated gold.
Despite this negative trend, indicators of economic fragility and ongoing geopolitical tensions in the Middle East are anticipated to provide support for precious metals in the immediate future.
Gold traders remain vigilant, with particular focus on speeches by Fed officials Jefferson and Mester on Monday. Additionally, attention will be drawn to key economic indicators later in the week, including the US Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Sales figures. Stronger-than-expected economic data could dampen expectations for a Fed rate cut, potentially exerting downward pressure on XAU/USD.
Market Movers:
San Francisco Fed President Mary Daly emphasized the necessity of prolonged restrictive policy to achieve the Fed’s inflation objectives.
Atlanta Fed President Raphael Bostic indicated that the central bank is likely still considering interest rate cuts this year despite uncertain prospects.
Dallas Fed President Lorie Logan highlighted upside risks to inflation and suggested it is premature to consider interest rate cuts.
Minneapolis Fed President Neel Kashkari adopted a cautious stance, expressing a “wait-and-see” approach regarding interest rates and emphasizing the high threshold for implementing rate hikes.
Furthermore, geopolitical tensions escalated as the Israeli military launched operations in northern Gaza, with precise engagements reported in various locations. Meanwhile, the Michigan Consumer Sentiment Index for May registered a decline from April, with the University of Michigan reporting increased inflation expectations for both one-year and five-year outlooks.
Technical Analysis:
While gold prices experienced a slight decline, the overall bullish outlook remains intact, supported by the yellow metal’s position above the key 100-day Exponential Moving Average (EMA) on the four-hour chart. The 14-day Relative Strength Index (RSI) remains in bullish territory, indicating favorable prospects for further upside movement.
Key resistance levels for XAU/USD include $2,378 and $2,400, with a decisive break potentially leading to a rally towards major resistance near the all-time high at $2,432, followed by $2,500. Conversely, key support levels are observed near $2,325 and $2,281, respectively.
Despite recent fluctuations, the constructive technical picture suggests continued optimism for gold prices in the near term.
