Gold has pulled back from the crucial $2,400 level during trading on Thursday, which is an area that has been important multiple times.
With that being said, I think we are just simply entering some type of consolidation area more than anything else.
The $2,400 level above continues to be an area that I’ll be paying close attention to, and therefore, if we can break above there on a daily close, then I’m interested in getting long.
If we pull back from here, then the market could drop all the way down to the $2,300 level, which of course is a major support level based on the previous action. And now that the 50 day EMA is racing towards that level, it makes a lot of sense that traders will continue to look at that as a short term flaw in general, and I think this is a market that remains bullish. But you could make an argument for an attempt at least to form a little bit of a double top. A lot of this will come down to interest rates, especially in the United States. So, we’ll see how that goes. If interest rates start to really spike, that could work against gold.
Plenty of Buyers Overall
But at the same time, we do have central banks around the world buying gold. Hand over fist. Let’s not forget all of those massive geopolitical issues that are still out there waiting to cause headaches. So, with that being said, I don’t have any interest in shorting gold, at least not at the moment.
At this point in time, I look at a pullback as more likely than not going to be a buying opportunity in general. This is a market that I think continues to be very volatile, but that’s not really that new for gold, and as such, traders should be cautious about getting “too big” in this market. This is a positive market overall, but at this point, it is obvious that a certain amount of discretion is necessary when putting money to work, instead of just piling into this market.
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Silver is outperforming Gold, so traders should be more confident of being long of Silver than of Gold.
The best new trade opportunities which might set up today will be a long trade in Silver above the $28.80 area or in Gold from support at either $2355 or $2336.
Stock markets are mostly bullish, which is probably good news for further rises in Gold and Silver.
Gold (XAU/USD): Technical Analysis
The price chart below Gold is well established within a long-term bullish trend. Bulls still need caution as the price is not trading in blue sky and may still hit resistance. However, we have continued to see bullish price action over recent days, and the price is approaching and not far from the recent significant swing high at $2378.
A few hours ago, the price seems to have based off the support level at $2355.06. The price looks quite likely to rise higher and it could well reach or exceed $2378 today.
There will be a release of highly important US CPI data later today which will likely cause market volatility. If the CPI number is weak for the US Dollar, we can expect Gold to rise higher, and vice versa.
Key Support Levels:
$2355
$2336
Key Resistance Levels:
$2400
$2431
Silver (XAG/USD): Technical Analysis
The price chart below shows that Silver is well established within a long-term bullish trend. Recent hours have seen the price continue to rise bullishly and get very close to the recent swing high. It is notable that the price action here in Silver looks more bullish than what is happening in Gold, suggesting that a long trade today in Gold may work out better than one in Silver.
A problem for bulls is that we are starting to see signs that the bullish momentum is fading over the short term, as the price gets nearer to the $28.80 area.
A long trade here in Silver could be a great idea if we get a breakout beyond $28.80 with strong short-term momentum. This will probably not happen until after the US CPI data release.
Traders who prefer to buy at bounces on support after dips will likely struggle here because the nearest support level is quite a way lower, at $28.02.
Key Support Levels:
$28.02
$27.73
$27.47
$27.00
Key Resistance Levels:
$29.00
$29.80
$30.00
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Gold prices have declined to around $2,332 an ounce as of the start of trading this week.
This is as investor focus shifts to key US inflation reports due out this week to seek further clues about the Federal Reserve’s monetary direction amid mixed signals from Fed officials.
The US Producer Price Index is scheduled for release today, Tuesday, followed by the Consumer Price Index tomorrow, Wednesday.
After the weaker-than-expected US jobs report for April and the disappointing job report last week, expectations for US rate cuts this year have increased.
Markets expect the Fed to start easing monetary policy in September.
In recent months, gold prices have risen, driven by strong investment demand in the over-the-counter market, continued buying by global central banks, and increased demand from Asia. Escalating tensions in the Middle East also continue to support the safe-haven appeal of gold. In the latest development, Israel deployed tanks into eastern Jabalia in northern Gaza on Sunday after a night of heavy airstrikes and ground fire.
On the front of factors influencing the gold market, the 10-year US Treasury yield started the week’s trading below 4.5% as traders eagerly await the release of key economic data. The focus will be on CPI and PPI data, as well as retail sales and industrial production figures, to gauge inflation and economic strength. In the meantime, investors will be paying close attention to comments from various Fed officials for clues about when the Fed may start cutting rates, particularly Fed Chairman Powell’s appearance at the annual general meeting of the Association of Foreign Banks in Amsterdam today, Tuesday.
Overall, comments made by several policymakers last week indicated that rates would remain high for some time. Furthermore, the odds for Fed easing in September are currently 61% and 74% for November.
Another factor affecting the gold market is that the US dollar index fell to 105 on Monday as investors await key US inflation data this week which could impact Fed monetary policy expectations. Last week, the index ended with modest gains as Fed officials urged caution before cutting rates. In this regard, Fed Governor Michelle Bowman said she did not expect it would be appropriate to cut rates in 2024, while Dallas Fed President Lorie Logan said it was still too early to think about cutting rates.
Meanwhile, data on Friday pointed to a jump in consumer inflation expectations, although a sharp decline in US consumer confidence added to evidence that the economy is losing momentum. Also, markets are still pricing in September as the start of the easing cycle. Concurrently, investors are now looking to April inflation data to further guide interest rate expectations.
Gold Price Forecast and Analysis Today:
The decline in gold prices is natural, and the overall trend remains upward. The retracement may provide opportunities to buy again, and currently, the nearest support levels for gold are $2318 and $2285 per ounce, respectively. Conversely, on the same time frame, the daily chart below indicates that returning to the resistance area at $2375 is crucial for bullish movement towards the psychological resistance at $2400 per ounce once more. Evidently, gold prices may continue to move within narrow ranges until reacting to US inflation figures and statements from Federal Reserve policymakers led by Jerome Powell.
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Gold was all over the place during the trading session on Friday as the jobs numbers came out lower than anticipated.
Looking at the shorter term charts, the market had initially swung all the way up to the $2,323 level in the $2,275 level and then turned around to basically close in the middle of the day at the middle of the candlestick.
So, a lot of noise for no particular reason. It is interesting to note that we are right around the $2,300 level and that of course is an area that a lot of people will pay attention to as it is a large round psychologically significant figure.
That being said, if we can take out the top of the candlestick from the Friday session, I suspect that we may continue to see upward pressure. There are plenty of reasons to think that gold may continue to go higher, not the least of which, of course, is geopolitical concerns. Even if we broke down below the bottom of the candlestick for the day, then the 50-day EMA right around the $2,250 level and then eventually the $2,200 level, both could offer a significant amount of support.
External Pressures
Pay attention to interest rates, because if it looks like traders are betting on the Fed cutting rates sooner rather than later, that will also help gold. This is a chart that is very technically sound and despite the fact that we got thrown around quite a bit on Friday, the reality is, this is still a very bullish market.
Because of this, I have no interest whatsoever in trying to get short of the gold market, and most of my energy is focused on trying to find a decent entry point. Over the longer term, I would not be surprised at all to see the gold market go much higher, perhaps even reaching $2,500 given enough time. On the downside, even if we break down below the $2,200 level, I think there are plenty of buyers underneath it might jump into the market in trying to take advantage of “cheap ounces.”
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Gold continues to be very noisy as the month of April was very choppy.
This does make a certain amount of sense considering that gold shot straight up in the air over the course of the last couple of months, and therefore I think we needed to spend a little bit of time breathing and perhaps even soaking in some of the momentum.
Because of this, I think the month of May will be very difficult. I don’t mean this in the sense that I think the month of May will be necessarily negative, just that the markets could see a little bit in the way of volatility that causes issues. Ultimately, in the short term I do think that anytime we get a significant pullback, there will be plenty of buyers willing to jump in and take advantage of this market. With that being said, gold is a market that has a lot of different things working for it at the same time and therefore I think you have to look at this through the prism of whether or not risk appetite is increasing or falling, as well as many other things.
Looking at this chart, it’s obviously a bullish one, so at this point in time I remain very bullish on gold. That doesn’t mean that we will get a significant pullback, but I would probably keep an eye on this market as one that is a good way to play risk appetite. Furthermore, we also have to pay close attention to the interest rate markets, because they continue to see a lot of higher rates, and that has people a bit concerned. However, if we were to break down below there, then the $2200 level could be an area that I would become even more aggressive at. After all, that just means that gold is much cheaper. As far as buying at these high levels, then I think you have to be a little bit more cautious in the sense that we are a bit overstretched.
I suspect that most of this month will probably be about consolidation, but I also recognize that we will possibly break out to the upside or even downside, but either way the trend will remain the same. In other words, this is a “long only market” at the moment.
WTI Crude Oil Monthly Forecast: May 2024
The West Texas Intermediate Crude Oil market has been very noisy during the month of April as we continue to see a lot of tension in the Middle East.
At this point though, it looks like the war is not going to spread any further, and I think a lot of traders are starting to relax a bit due to that. We had initially seen the market jump, but since then we have seen nerves settle a bit as the Iranians chose not to accelerate the war itself. That being said, you need to keep in mind that there is a certain amount of geopolitical risk when it comes to this market, and therefore you have to be very cautious about getting too aggressive.
Underneath, we have the $80 level and I think the $80 level end up being a short-term floor in the market. This is as the $85 level above offers a certain amount of resistance. After that, then we have the $87.50 level offering significant resistance as well. Ultimately, we could go racing toward the $90 level, but I think at this point in time we need to see some type of specific reason. After all, we do have a cyclical trade in the fact that the demand for crude oil tend to pick up this time of year, but at the end of the day, the supply isn’t as bad as it once was feared to be.
That being said, the risks in this market are probably higher to the upside than they are to the downside, as there are so many undeterminable geopolitical issues that could come in and cause chaos in this market. Because of this, I look at pullbacks as a buying opportunity and you probably will get that during the month of May. I’d be especially interested near the $80 level, but it doesn’t necessarily have to be in that area. Quite frankly, the lower we go, the more interested I am in buying in this market. On the other hand, this is a market that I think will continue to see a lot of volatility so be cautious with your position sizing. Longer-term, this is a market that I do think breaks higher and by the end of May it would not surprise me at all to see this market closer to the $87.50 level above.
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Gold prices settled below $2300 an ounce on Wednesday trading, hovering near a four-week low as investors turned cautious ahead of the Federal Reserve’s policy decision amid concerns it will keep US interest rates high for an extended period.
Gold fell over 2% on Tuesday, extending losses to $2285 an ounce, and today continued its decline to $2282 an ounce as the dollar and Treasury yields rose on the back of strong US wage data.
The US Employment Cost Index, a key gauge of wages for civilian workers, rose more than expected by 1.2% in the first quarter. Traders have also unwound their bets on Federal rate cuts this year in recent weeks due to strong US economic data and stubborn inflation.
As you know, higher interest rates increase the opportunity cost of holding non-yielding bullion, which undermines its appeal. Elsewhere, the World Gold Council said global gold demand rose 3% year-on-year to 1,238 metric tons in the first quarter, the strongest start to a year since 2016.
According to the platforms of gold trading companies, gold prices have been volatile as traders look ahead to a week that includes the Federal Reserve’s rate decision meeting and key US jobs data. Policymakers are expected to reiterate their stance on raising interest rates for longer at the end of a two-day meeting on Wednesday. The last time Fed Chairman Jerome Powell spoke, he indicated that policymakers were likely to keep borrowing costs higher for longer than previously expected, citing a lack of progress in bringing down inflation and continued strength in the labor market.
On the other hand, the US non-farm payrolls number due out on Friday will also be important for traders. With the Fed’s preferred inflation gauge rising at a rapid pace in March, swaps traders now see just one Fed rate cut this year, down from the six or so quarter-point cuts they were pricing in at the start of the year. Higher rates are generally negative for gold because it does not pay interest.
In other news, the yen rose after touching its weakest level against the dollar in 34 years, amid speculation that the Japanese government will intervene to support its beleaguered currency for the first time since 2022. Any action could weaken the dollar, which could boost bullion.
Gold Price Forecast and Analysis Today:
In general, the price of gold has risen by more than 13% this year, hitting a record level earlier this month, despite the Federal Reserve’s postponement of its timeline for interest rate cuts. The rise in the precious metal over the past two months has been linked to central bank purchases, strong demand from Asian markets, especially China, and increased geopolitical tensions from Ukraine to the Middle East. I see the current selling activity as an opportunity to return to buying gold, and the most suitable levels to do so currently are the support levels of $2245 and $2180, respectively.
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At the end of last week’s trading sessions, gold futures managed to capture some gains as financial markets shrugged off the latest inflation data.
Despite widespread expectations that the US Federal Reserve would keep interest rates high for longer, stocks formed a reflection of the selling pressure witnessed on Thursday.
Now, the question arises: Is gold looking to revisit $2400 per ounce again?
According to gold trading platforms, prices rose on Friday to the resistance level of $2352 per ounce before settling around $2333 at the beginning of an important and eventful week of trading. The price of the yellow metal was poised for a weekly decline of 2.2%, but it remains up by nearly 14% since the beginning of 2024.
Similarly, silver prices, the sibling commodity to gold, rose above $27 per ounce. Overall, silver also trended towards a weekly decline of 4.3%. However, like gold, silver prices have risen by approximately 15% so far this year.
Overall, all eyes were on the preferred US inflation gauge by the Federal Reserve: The Personal Consumption Expenditures (PCE) Price Index. According to economic calendar data, in March, the Personal Consumption Expenditures (PCE) Price Index rose higher than expected, reaching 2.7%, compared to 2.5% in February, according to the Bureau of Economic Analysis (BEA). The market had expected a reading of 2.6%. On a monthly basis, the inflation rate in personal consumption expenditures rose by 0.3%, unchanged from the previous month and in line with market expectations.
The core Personal Consumption Expenditures (PCE) Price Index, which excludes volatile food and energy sectors, remained at 2.8%, but came in higher than the agreed estimate of 2.6%. Recently, the core PCE Price Index jumped by 0.3% from February to March. On a three-month basis, the core PCE Price Index rose to 4.4%. Also, the inflation rate in core personal consumption expenditures excluding housing increased to 3.5% on an annual basis and rose by 0.4% monthly.
In other economic data, personal spending increased by 0.8% for the second consecutive month, surpassing market expectations of 0.6%. Personal income jumped by 0.5%, up from 0.3%, in line with expectations. Furthermore, personal saving rate fell from 3.6% to 3.2%. Despite the latest indicators pointing to a second wave of inflation and a longer period of higher interest rates, investors remained unconcerned as key indices rose by as much as 1.85%.
Meanwhile, this supported the gold market as the US Treasury bond market weakened, despite the strength of the US dollar curbing gains. US Treasury yields were in the red across the board, with the 10-year bond yield falling by 5.3 basis points to 4.65%. Moreover, the yield on 2-year bonds fell below 4.99%, while the yield on 30-year bonds fell below 4.77%.
Another factor affecting gold, the US Dollar Index (DXY), which measures the US currency against a basket of other major currencies, rose to 105.95, from the opening at 105.60. Obviously, the stronger dollar typically brings gold prices down as it makes buying it more expensive for foreign investors. Meanwhile, according to the CME Federal Reserve Watch Tool, the futures market is now heading for only a one-quarter-point cut in US interest rates this year.
Moreover, this supported the gold market as the government bond market weakened, although a stronger US dollar limited gains. US Treasury yields were in the red across the board, with the 10-year bond yield falling 5.3 basis points to 4.65%. Also, the two-year bond yield fell below 4.99%, while the 30-year bond yield fell below 4.77%.
Another factor affecting gold, the US Dollar Index (DXY), which is a measure of the US currency against a basket of other major currencies, rose to 105.95, from opening at 105.60. A stronger dollar is usually bearish for gold prices because it makes it more expensive for foreign investors to buy. Meanwhile, according to the Fed’s CME monitoring tool, the futures market is now set to cut US interest rates by just a quarter of a point this year.
Gold Price Forecast and Analysis Today:
According to the performance on the daily chart attached, the price of gold is still in an attempt to avoid further losses, and the success of the bulls in returning to the vicinity of the resistance levels of 2385 and 2420 dollars per ounce is possible in the event that the price of the US dollar declines in the wake of the US Federal Reserve Bank’s announcement and the US job numbers. In addition to increasing global geopolitical tensions and increasing central banks’ purchases of gold. On the other hand, breaking the level of $2,300 per ounce is possible if the dollar continues to strengthen and investors’ appetite for risk increases.
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Rehana William |Financial Consultant _Forex_Gold Xauusd| Fund Manager 