Gold price surged over $36.52 due to several Central Banks continuing to cut interest rates

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Gold prices surged due to many Central Banks continuing to cut interest rates, geopolitical tensions, and recovering Chinese trade data.
Gold price surged over $36.52 yesterday with a rise of 1.58% from $2306 to a high of $2346 by forming a long-body bullish candlestick with no shadow.

 Sweden, the Riksbank took steps to reduce interest rates by 0.25% to 3.75%. The Bank of England meeting showed an increasing willingness to lower interest rates. The Swiss National Bank (SNB) lowered interest rates at its March meeting, the RBA's dovish policy and the European Central Bank (ECB) has guaranteed it will cut interest rates in June.

Geopolitical tensions are another trigger are also a concern for traders, the Israeli attack on Rafah shows the need for a ceasefire so that the war continues. Elsewhere the Ukraine vs Russia war adds further pressure on the risk side. The next Chinese data showed China's exports rose more than forecast at an annualized 1.5% in April, recovering from a 7.5% decline in the previous month is becoming another reason behind gold soar.

[radex78]

Gold prices fell after rallying last week, in trading on Monday the price of gold fell from a high of $2364 to a low of $2332.
Prices may still consolidate ahead of the release of US inflation data which will be released on Wednesday this week.
Inflation data is very important and will probably get a market response because it relates to the possibility of the Fed cutting interest rates or not.

[radex78]

Yesterday's gold price rose from a low of $2334 to a high of $2359. Apart from geopolitical events, gold is also the choice of central banks as a reserve asset. The BRIC countries have also abandoned the USD as a currency for international transactions, increasing demand for gold. The only obstacle is the Fed's interest rates which are still high, this causes people to prefer high yields to buying gold. Market concern to US inflation data today.

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Gold prices failed to continue yesterday's bullishness and were stuck near the upper band line which then pulled back due to profit-taking. Gold prices rallied sharply after the CPI data was released with the actual data being lower than forecast. This data received a market response and caused the price of gold to rally strongly reaching a high of $2397 

The release of cooler US Consumer Price Index (CPI) and Retail Sales data for April provides expectations for the future path of US interest rates, which is an important factor for Gold's value.

The lower CPI data reflects disinflation which advances expectations that the Fed will cut interest rates. According to CME's FedWatch Tool, there is about a 75% chance that the Fed's interest rates will be at lower levels after the September meeting.
 

[radex78]

The price of gold still has the potential to be bullish above the $2400 price level. Last week, the price of precious metals, both gold and silver, surged after US inflation data showed cooling, giving hope that the Fed would cut interest rates. Market rumors predict the Fed might cut interest rates at its September meeting.
On the other hand, China's improving economy shows positive reports which also boost gold prices because this country is one of the world's largest gold importers. In terms of geopolitical risks, gold is also one of the safe-haven assets of choice and is a global central bank reserve. The gold price has reached a new ATH and may still climb higher.

[radex78]

At market open Monday, gold rose to a high of $2,450 on news of the Iranian president's death. However, the rise did not continue and gold prices pulled back to reach $2407 as comments from Federal Reserve (The Fed) Deputy Chairman for Supervision Michael Barr suggested interest rates should remain at current levels for longer for inflation to return to target sustainably.

Even though it fell to a low level of $2407, the price of gold rose again to reach $2436 and waved down again to $2423. The market seems to be consolidating, but several factors supporting gold include Instability in the Middle East region due to the death of the Iranian president, Ebrahim Raisi, and several other important officials due to a plane crash The Fed is likely to lower interest rates, this will also give a boost to gold

Fractures in the world order encourage countries' central banks to buy gold for reserves. This can be seen from the ties between President Putin and the President of China during a recent visit to China, giving a picture of the cracks in the world order. BRICS members who no longer use USD choose gold as their reserve.
 

[radex78]

Yesterday's gold price tended to move flat and drew a bearish candlestick with long shadows at the top and bottom of the candle which indicates an indecision candle.
It seems that gold prices are entering a consolidation zone after a strong rally last week due to declining US inflation data.
However, lately, Fed officials seem to be still hawkish and will keep interest rates high for longer, this may prevent gold from climbing higher.

High interest rates are not good for gold and investors prefer cash or bonds that provide high yields.
Recently CME FedWatch held the survey, and the results of the survey, the probability of the Federal Reserve lowering interest rates by 25 basis points in September increased slightly to 49.6%, up from 48.6%

 

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After the FOMC meeting minutes, the price of gold plunged from $2426 to a low of $2374.

In the summary of meeting decisions, the FOMC unanimously decided at the meeting to maintain the benchmark short-term lending interest rate at 5.25%-5.5%. High interest rates are less supportive of gold because people prefer cash and bonds that provide higher yields.

A summary of the meeting read, "Participants observed that although inflation has declined over the past year, in recent months there has been a lack of further progress in achieving the Committee's goal of 2 percent. The latest monthly data shows a significant increase in the goods and services of price inflation. "

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Today's gold price fell to the price level of $2326.91 from a high of $2383.67, it appears that the price is drawing a bearish candlestick with a long body reflecting the sharp fall in gold prices yesterday.

Gold prices have dropped to a low of $2326, continuing Wednesday's decline after a short correction. The FOMC meeting minutes held last Wednesday which were attended by many Fed officials anonymously maintained high interest rates at 5% - 5.50%. According to Fed officials, inflationary pressure is still persistent despite the cooling.

High interest rates hamper demand for gold because cash and bonds are more attractive to investors. The Fed even discussed the possibility of raising interest rates to tackle inflation. Analysts predict the Fed's high interest rates at least until September.
 

[radex78]

Gold prices tried to continue their recovery on Monday although, in the short term, they still had difficulty continuing their bullish streak. Gold prices rose yesterday from a low of $2332 to a high of $2358. Gold price movements are still below the $2400 level, which is gold's psychological level.

This week, investors will focus on the United States' core Personal Consumption Expenditure (PCE) price index data for April and the Eurozone's preliminary inflation data for May, which will influence speculation on interest rate cuts by the Fed and the European Central Bank (ECB ).

Market speculation is that the Fed may cut interest rates in September and still keep interest rates high because policymakers need more time until they are sure the 2% inflation target is achieved. This expectation has somewhat cooled investors even though high interest rates may cause a lack of liquidity in the market and affect the economy, thereby reducing demand for gold.

[radex78]

Even though gold's price tends to draw a bull market, in the weak bullish stage, the price rose to the price level of $2364 but fell again to around $2358.  Rising in gold prices may be caused by a weakening USD due to the Fed's reduction in estimates for lowering interest rates. Analysts estimate that the US central bank will start reducing lending rates in the last quarter of this year. Besides, gold imports to China via Hong Kong fell 38% in April compared with the previous month, according to data from the Hong Kong Census and Statistics Department.

This week investors focus more on the US core Personal Consumption Expenditures (PCE) Price Index data for April, which will be published on Friday.

[radex78]

Gold price yesterday drew a bearish candlestick with a lower low than the previous candlestick. After three days a bullish candlestick was formed on gold, yesterday the price decreased and formed a bearish candle.

It seems that gold's bullish sentiment is still stuck at the high of $2362. When the price of gold reached this price level it then fell again to a low of $2334, this was lower than the previous low of $2340.

This decline in gold prices may have been triggered by the US Dollar and bond yields rising as traders weigh bets on the Fed's interest rate cut for September.
For more fresh clues, investors will look to the US core PCE price index data on Friday.

The inflation measure chosen by the Fed is predicted to grow stably both monthly and annually, at 0.3% and 2.8% respectively.

Data from CME FedWatch shows there is a decrease in the chance that the central bank will lower interest rates from the previous 57.5% down to 46%, reflecting investor confidence that the FED will lower interest rates is starting to fade.

While one FED official, Minneapolis Fed Bank President Neel Kashkari said in an interview with CNBC broadcast, "I think the chances of us raising interest rates are quite low, but I don't want to take anything off the table."
 

[radex78]

Yesterday the price of gold was corrected down to a low price level of $2322 before finally rising again and closing at $2342. The rise in gold prices follows the report of the release of a declining US GDP estimate. Annual US GDP growth in the first quarter was revised lower to 1.3% from the first estimate of 1.6%, according to data from the US Bureau of Economic Analysis, released on Thursday. The figure was below the 3.4% in the fourth quarter but was in line with analysts' expectations. 

Today, Friday, investors are waiting for an update on the release of the US core PCE index to measure Change in the price of goods and services purchased by consumers, excluding food and energy. Data Forexfactory shows forecast value is 0.3%, if in release an actual value higher than the forecast usually has a good impact on the currency

Minneapolis Fed President Neel Kashkari surprised markets on Tuesday when he said Fed officials had not ruled out raising interest rates. He then added that if the Fed does lower borrowing costs, it would happen twice by the end of 2024.

[radex78]

The price of gold on Friday became very volatile after the release of Personal Consumption Expenditure (PCE) data with the actual data being 0.2% of the forecast value and previously 0.3%. The price of gold soared to $2359 after the release of the PCE but the increase did not last long, the price of gold fell again to a low level of $2320.

Maybe many traders were trapped in this situation when gold breakout and then rose, many retail traders placed buy positions, but after a while the price stuck at $2359 and retail traders still hoped that the price would rise even higher, because the price then fell, many retail traders hit stop loss, there is a role for smart money there which is usually carried out by large institutions with very large transaction volumes.

[radex78]

The price of gold is now around $2324 near the MA 50 on D1 timeframe. Price moved between the middle band and lower band line towards the end of last week.
Here the Bollinger band draws a flat channel with wide band spacing reflecting the possibility of price moving within the lower band range of $2289 and the upper band range of $2423.

The 50 MA near the price is now drawing a slight rising channel reflecting a weak uptrend signal, the price cross line indicates a possible trend transition.
On the other hand, the RSI indicator points to level 46, which means the price is below the downtrend level.
 

On Monday, the US economic agenda featured the ISM Manufacturing PMI data for May, the previous value was 49.2 and the forecast was 48.8, if in release the actual value was greater than forecast usually good for  currencies.

[radex78]

Gold price is now at $2350 near the middle band line. in last week's trading, this price level became a resistance zone for gold with a high of $2364 on May 28. On D1 timeframe, gold prices are still moving between the middle and lower band lines, this reflects that prices tend to be below the downtrend line. The Bollinger band itself draws a flat channel with wide band spacing reflecting a sideways market in high volatility market. Another indicator MA 50 draws an ascending channel below the price reflecting an uptrend with weak momentum. Meanwhile, the RSI points to level 51, this means the price is moving slightly above the uptrend level.

The price is currently near the highest point of 2364 which was formed on May 28, further increases are expected to reach this level or even higher as hopes increase for the Fed to cut interest rates after ISM manufacturing showed a contraction with actual data lower than forecast and previously.

[radex78]

It seems that the gold price is still moving in a range and is having difficulty breaking the $2362 price level. Yesterday the gold price fell again after rising to a high of $2352, the price failed to break through the $2362 price level. Seeing that the gold price pattern is currently drawing a flag pattern, a downside breakout allows gold to continue lower

The current daily range for gold is at a low of 2,327.01 and a high of 2,328.26 with the price range at the 52 week low at 1,810.10 and 2,450.13 according to Investing data.

Gold's decline may be caused by fears of lower global inflation pushing investors to shift to bonds, which may drain investment from Gold.

Today traders focus on data on ADP Non-Farm Employment Change today and Non-Farm Employment Change on Friday which is predicted to move the market. Because gold is correlated to the USD, a weakening USD can push gold prices up, while a stronger USD can push gold prices down.

[radex78]

Gold prices are moving around 2355, slightly below the middle band line. Referring to price history in the last few days, gold's resistance zone was quite solid until yesterday.
On D1 timeframe, yesterday the gold price drew a long body bullish candlestick with a low of 2325 and a high of 2357. The Bollinger band indicator drew a flat channel with a slightly narrowed band reflecting a sideways market with medium volatility.The 50 MA below the price draws an ascending channel reflecting an uptrend signal with weak momentum. Another indicator, the RSI, points to level 52, which means the price is now moving above the uptrend level.

This week, investors are still waiting to focus on NFP data and other economic data regarding the unemployment rate and non-farm employment change which will be released on Friday.

[radex78]

Finally the ECB cut its benchmark interest rate by 25 basis points to 4.25% from 4.5% at its meeting last Thursday, June 6, becoming the first cut since 2019.

According to ECB President Christine Lagarde the decision to cut the ECB's three main interest rates by 25 basis points was based on the latest assessment of the inflation outlook. 

The price of gold yesterday rose to the price level of $2378 following the previous increase, the price of gold is now drawing two bullish candlesticks which allows for a bullish pattern to occur. The resistance target refers to the upper band around $2425.

Gold prices are getting support as the BoC and ECB have lowered interest rates in recent days and the SNB may cut interest rates in June 

Gold also received positive sentiment from investors' high expectations of confidence that the Fed would also lower interest rates in September. According to CME's TheFedWatch, the probability level of the Fed reducing interest rates in September reached 69%.

 

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Gold prices fell sharply on Friday before the market closed, gold prices have fallen from a high of $2387 plummeting to a low of $2286. This decline was triggered by NFP data released on Friday showing the US economy added 272 thousand jobs in May compared to forecasts of 185 thousand. This result is also higher than the April figure which was revised lower to 165 thousand.

Although the Unemployment Rate rose to 4.0%, versus 3.9% forecast from 3.9% previously. From China,  no further gold buying, data shows PBOC gold unchanged at 72.8 million troy ounces at the end of May.

[radex78]

Last week gold prices fell after NFP data provided encouragement for USD strengthening. Gold often correlates with the USD, when the USD strengthens the price of gold tends to fall, and if the USD weakens the price of gold tends to rise. NFP data that has been released shows the US economy added 272 thousand jobs in May compared to the forecast of 185 thousand. This result is also higher than the April figure which was revised lower to 165 thousand.

Today there is no important news that might be a trigger for market movements, a number of banks in Australia and China are not operating because they are observing holidays. It is predicted that a number of bank holidays will reduce market volatility considering that China is one of the largest gold importing countries.

However, this week there is a focus on news referring to forexfactory, inflation data and the Federal Funds Rate which is predicted to trigger market volatility on Wednesday.

[radex78]

Gold prices fell sharply after US data was released on Friday.
The release of US NFP data showed a higher-than-expected increase in the number of new workers joining in May at 272,000, beating economists' forecasts of 185,000 and up from the previous data of 165,000 in April.

NFP is one of the high-impact news that many markets respond to because it is a fundamental indicator that shows the performance of the US economy. The actual data was greater than estimates, which tends to be good for the currency. This is why after the NFP the USD currency strengthened against other currencies including Gold.

Today gold is trading at around $2311, up from $2287, it seems that the influence of NFP has faded somewhat. Or maybe it was due to profit taking and people started buying gold because the price fell.

Yesterday market volatility was somewhat reduced because many banks in Australia and China were not operating due to holidays

Investors are now focusing on CPI data on Wednesday which is also a US fundamental indicator that may be one of the tools for the Fed's possible interest rate policy. Bigger CPI data tends to have a good impact on the USD.

 

[radex78]

Today the US CPI data will be released and the Fed funds rates will be the focus of investors. Gold's lower volatility may be due to stalled Chinese buying.

According data from Forexfactory CPI core is forecast at 0.3% with previously revised data of 0.3%. If later actual data greater than forecast, could lead gold dropped, Investors will also wait for the FOMC economic projections, to see whether the statement is more hawkish or dovish.

Yesterday's gold price drew a bull candlestick with a long shadow at the bottom of the candle. Price drew a low of $2297 and a high of $2319. In the H1 timeframe, the price of gold moves below the upper band line. Bollinger bands draw flat channels with narrow band spacing reflecting sideways with less volatility.
MA 50 below the middle band drawing a flat channel also indicates a sideways market.

[radex78]

Gold prices strengthened after the release of US inflation data which showed the actual value was lower than forecast. The Fed at its meeting on Wednesday finally decided to keep interest rates unchanged at 5.50%. According to FXOpen's Tradingview chart, the price of gold jumped from a low of $2311 to a high of $2337 in just one hour, this was seen from one long bullish candlestick, the price rose again to $2341 before finally rebounding to around $2231.

Several banks in Europe have lowered their interest rates, after the ECB then Canada followed suit, and Denmark also lowered its benchmark interest rate by 25 basis points to 3.35%. Meanwhile, JP Morgan estimates that the Fed will cut interest rates twice this year and three times next year.

Today Investors' next focus will be on the release of Unemployment Claims news and core PPI data which are fundamental indicators as one of the Fed's policy measuring tools in making interest rate policy.

[radex78]

Gold's price  is still at $2280 now,  The price of gold is now in the range of $2300 and moving in the range 2295.72 - 2326.76 and moving between the middle and lower band lines.

Gold price moves between the middle and lower bands in the range of 2300 in the H1. Here the Bollinger band draws a slight downward channel with narrow band spacing in the movement 2323-2297.

MA 50 draws a flat channel above the middle band indicating a sideways market. Meanwhile, the RSI indicator points to level 42, which means the price is below the downtrend level.
 

Most Fed officials will probably ease by the end of the year.  The FOMC appears to be split only on the number of rate cuts in 2024: 7 Fed officials forecast one rate cut while 8 forecast two, the tiebreaker being the 4 Fed officials who now forecast no rate cuts this year. The majority of Fed officials predict the start of the easing cycle at the end of this year.

The Fed did not lower interest rates at its meeting on Wednesday and kept interest rates unchanged at 5.50%, but the Fed is projecting only one interest rate cut of 0.25% in 2024.

Meanwhile, the influence of the core PPI data of 0.0% is lower than the forecast of 0.3% from the previous revision of 0.5%, and the PPI data of -0.2% is lower than the forecast of 0.1% and the previous revision of 0.5%, which should have a good impact on gold. Jobless claims also rose 242k from a forecast of 225k and a previously revised 229k.