GOLD hovers around crucial support,awaiting C.bank announcements

Gold continues to trade with a bearish tone as it hovers around crucial short-term support, lacking clear direction as investors await a series of central bank decisions. Pre-announcement anxiety, along with a holiday in China and mixed catalysts surrounding the Federal Reserve (Fed), are constraining movements in XAU/USD.

Following a dip to a fresh three-month low of $1,919.12 per troy ounce, gold found some relief as the US Dollar lost momentum on comments made by Federal Reserve Chairman Jerome Powell. The Greenback had initially rallied in anticipation of a hawkish stance from the Fed chief.

Powell's prepared remarks, released ahead of the event, aligned with the latest Federal Open Market Committee (FOMC) Minutes, which indicated that recent indicators suggest a modest expansion of economic activity following a significant slowdown last year. Additionally, policymakers view the labor market as "very tight," with almost all FOMC participants expecting a somewhat further increase in interest rates by the end of the year. The US Dollar strengthened further while Wall Street futures declined.

However, Powell's remarks eased concerns, leading to a recovery in stock markets and subsequently pushing the US Dollar lower against major currencies. He emphasized that inflation is gradually receding and consumer strength is showing signs of weakening, with expectations of further deterioration throughout the year. Powell also hinted that it could be appropriate to gradually raise rates at a moderate pace and highlighted the moderation in wages, signaling policymakers' confidence in easing price pressures.

Our analysis suggests a potential pullback in gold towards the 61.8% and 78.6% Fibonacci levels, providing an opportunity to purchase gold at a discounted price. The recent break of the dynamic trendline adds to the possibility of a short-term setup while approaching this level of interest.

Kommentar:

Gold price (XAU/USD) has encountered some selling pressure around $1,917.50 in the European session, indicating a temporary setback for the precious metal. However, it is expected to rebound from this minor pullback and potentially reach an intraday low of $1,910.00. The decline in gold can be attributed to the strength of the US Dollar Index (DXY), which has gained momentum and triggered a sell-off in the yellow metal.

In the European market, S&P500 futures are continuing to experience significant losses, carrying forward the negative sentiment that originated in Asia. The prevailing market mood is risk-off, as concerns about global growth prospects loom large. Central banks persisting with their policy-tightening measures have heightened fears of an impending recession.

The US Dollar Index has extended its rally to 102.70, as its appeal has been bolstered by the bleak global outlook. Additionally, expectations of further interest rate hikes by the Federal Reserve (Fed) are contributing to the upward trajectory of the US Dollar. Interestingly, US Treasury yields are facing downward pressure, with the 10-year US Treasury yields falling to approximately 3.78%.

Looking ahead, market participants will closely monitor the release of the preliminary S&P Global PMI data for June. Of particular interest is the Manufacturing PMI, which is anticipated to show a slight increase from the previous release of 48.4 to 48.5. On the other hand, Services PMI is expected to decline from 54.9 to 54.0.

It is worth noting that the US Manufacturing PMI has been contracting for seven consecutive months, and any further contraction could impact the value of the US Dollar. Economic activities are considered to be contracting when the PMI figure falls below 50.0