- Gold price is oscillating in a range near a three-week low touched on Friday.
- Fed rate cut bets undermine the USD, which, along with geopolitical risks, lends support.
- A positive risk tone caps the upside ahead of the global PMIs and the US ISM PMI.
Gold price (XAU/USD) struggles to gain any meaningful traction during the Asian session on Monday amid a combination of diverging forces and languishes near a three-week low touched on Friday. Growing acceptance that the Federal Reserve (Fed) will start cutting rates later this year, bolstered by signs of easing inflationary pressures in the United States (US), continues to undermine the US Dollar (USD). This, along with persistent geopolitical risks, turn out to be key factors lending some support to the safe-haven precious metal.
The upside for the Gold price, however, remains capped in the wake of a generally positive risk tone and hopes for a cease-fire in Gaza. Traders also seem reluctant and prefer to wait for this week's release of important US macro data scheduled at the beginning of a new month, including the Nonfarm Payrolls (NFP) report on Friday. Apart from this, key central bank event risks – the Bank of Canada (BoC) decision on Wednesday and the European Central Bank (ECB) meeting on Thursday – should influence the non-yielding yellow metal.
Daily Digest Market Movers: Gold price struggles to lure buyers despite softer US Dollar
- The US inflation report was in line with estimates and reinforced expectations that the Federal Reserve will cut interest rates this year, which is undermining the US Dollar and acting as a tailwind for the Gold price.
- The US Bureau of Economic Analysis (BEA) reported on Friday that the Personal Consumption Expenditures (PCE) Price Index rose 0.3% in April and held steady at 2.7% on a yearly basis, matching consensus estimates.
- The Core PCE Price Index, which excludes volatile food and energy prices, also matched expectations, and rose 2.8% on a yearly basis, while Personal Income and Personal Spending grew 0.3% and 0.2% respectively.
- The data lifts bets for an imminent Fed rate cut this year and leads to a further decline in the US Treasury bond yields, keeping the USD bulls on the defensive and lending support to the non-yielding yellow metal.
- Adding to this, tensions surrounding the Middle East turn out to be another factor limiting the downside for the safe-haven XAU/USD, though a generally positive tone around the equity markets should cap the upside.
- China's Caixin S&P Global Manufacturing Purchasing Managers' Index (PMI) rose to 51.7 in May from 51.4 previous and pointed to signs of stabilization in the world's second-largest economy, boosting investors' confidence.
- Furthermore, the latest optimism over a new ceasefire plan for Gaza announced by US President Joe Biden is holding back traders from placing aggressive bullish bets around the commodity.
- Market participants now look forward to the release of the final global Manufacturing PMI prints for short-term trading opportunities ahead of the US ISM Manufacturing PMI later during the day.
- Investors this week will also confront important US macro releases, including the NFP report and key central bank event risks – the BoC policy decision on Wednesday, followed by the ECB meeting on Thursday.
Technical Analysis: Gold price could weaken further once $2,320 support is broken decisively
From a technical perspective, some follow-through selling below the $2,320 level will confirm a breakdown through the 50-day Simple Moving Average (SMA) and pave the way for deeper losses. Given that oscillators on the daily chart have just started gaining negative traction, the Gold price might then weaken further below the $2,300 round-figure mark and test the next relevant support near the $2,285-$2,284 horizontal zone.
On the flip side, momentum beyond the $2,343-$2,344 area is likely to confront stiff resistance near the $2,360 region (Friday's swing high). Some follow-through buying beyond the $2,364 level will be seen as a fresh trigger for bullish traders and lift the Gold price towards the $2,385 intermediate hurdle en route to the $2,400 mark. The momentum could extend to the $2,425 zone en route to the $2,450 region or the all-time peak touched in May.
US Dollar price in the last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.07% | 0.00% | -0.19% | -0.27% | 0.24% | -0.29% | -1.35% | |
| EUR | 0.07% | 0.07% | -0.12% | -0.20% | 0.31% | -0.22% | -1.28% | |
| GBP | 0.00% | -0.07% | -0.19% | -0.27% | 0.24% | -0.29% | -1.35% | |
| CAD | 0.20% | 0.12% | 0.19% | -0.08% | 0.43% | -0.10% | -1.17% | |
| AUD | 0.27% | 0.20% | 0.27% | 0.08% | 0.51% | -0.02% | -1.08% | |
| JPY | -0.24% | -0.32% | -0.23% | -0.45% | -0.53% | -0.53% | -1.61% | |
| NZD | 0.29% | 0.23% | 0.30% | 0.09% | 0.03% | 0.54% | -1.06% | |
| CHF | 1.33% | 1.26% | 1.33% | 1.14% | 1.07% | 1.57% | 1.04% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
