Gold prices have recently shown a downward trend, closing the week around $2,326 after hitting an intra-day low of $2,319. This decline can be attributed to several factors, including elevated U.S. Treasury yields and cautious investor sentiment ahead of upcoming economic data releases.

However, amidst these pressures, geopolitical tensions in the Middle East have provided some support to gold, underscoring its traditional role as a safe-haven asset during periods of uncertainty.

Impact of US Economic Indicators and Fed Comments on Gold Prices

On the US front, gold prices initially rose to a four-day high of $2,339 following an inflation report indicating progress towards lower inflation, sparking optimism for a potential Federal Reserve interest rate cut in 2024. However, prices retreated to $2,324, a 0.12% decline, as traders reacted to the US PCE Price Index for May meeting expectations and reflecting stable consumer confidence despite higher prices.

Concurrently, US Treasury yields climbed to 4.339%, exerting downward pressure on gold. The US Dollar Index maintained stability around 105.80, experiencing slight fluctuations throughout the session. Federal Reserve officials, including Richmond’s Thomas Barkin and San Francisco’s Mary Daly, expressed cautious views on inflation and economic growth, impacting market sentiment.

Therefore, the impact on gold prices was mixed. Initialy, they rose to $2,339 on hopeful Fed rate cut expectations but later fell to $2,324 as stable US consumer sentiment and higher Treasury yields weighed on investor confidence.

Geopolitical Tensions in the Middle East Could Limit Gold’s Losses

Despite the downward pressure on gold prices, escalating geopolitical tensions in the Middle East could curb further declines. Gold, renowned as a safe-haven asset, typically attracts investment during periods of geopolitical uncertainty.

In the past 24 hours, Gaza’s Health Ministry reported 40 Palestinians killed and 224 wounded. Israeli forces targeted a water distribution point in Gaza City, resulting in the deaths of four members of the al-Ghazi family, including a child.

UN spokesman Stephane Dujarric highlighted Israel’s recent ground offensive in Gaza City’s Shujayea neighbourhood, displacing at least 60,000 residents, while operations in southern Gaza’s al-Mawasi area displaced 5,000 people and led to numerous casualties.

The conflict has taken a toll, with 37,834 deaths and 86,858 injuries in Gaza since October 7.

Daily Technical Outlook: Gold Spot/U.S. Dollar (XAU/USD)

The Gold Spot against the U.S. Dollar (XAU/USD) closed the week trading at $2,326.72, as observed on the 4-hour chart timeframe. Key price levels are pivotal for traders looking to make informed decisions.

The pivot point, marked by the green line, stands at $2,324.49, providing a critical reference for potential price movements.

Immediate resistance is identified at $2,332.00, followed by the next resistance levels at $2,339.86 and $2,354.09. These levels are crucial for assessing upward momentum.

On the downside, immediate support is noted at $2,320.88, with subsequent support levels at $2,310.26 and $2,297.61. These support levels will be vital in identifying any potential bearish trends.

The Relative Strength Index (RSI) is currently at 53.09, indicating neutral momentum, neither overbought nor oversold. The 50-day Exponential Moving Average (50 EMA) is positioned at $2,324.49, serving as a significant pivot point around the current price level.

In conclusion, it is recommended to consider buy positions above the $2,320 level, given the immediate support and resistance levels. A bearish trend may be anticipated if the price falls below this level. Continuous monitoring of the RSI and 50 EMA is essential to identify potential trend changes and make well-informed trading decisions.