Jun 21

Gold price holds gains around $2,360, more upside looks likely

Gold price (XAU/USD) remains confined in a range during the European session on Friday and consolidates the previous day's strong move up to a two-week high, around the $2,360-2,365 area. 

Technical Overview

From a technical perspective, the overnight sustained close above the 50-day SMA could be seen as a fresh trigger for bullish traders. This, along with the fact that oscillators on the daily chart have again started gaining positive traction, supports prospects for a further appreciating move. Hence, a subsequent move towards testing the next relevant hurdle, near the $2,378-2380 region, looks like a distinct possibility. The Gold price could eventually aim to reclaim the $2,400 round-figure mark.

On the flip side, the 50-day SMA, currently pegged near the $2,345-2,344 area, now seems to protect the immediate downside ahead of the $2,336-2,335 region. A convincing break below the latter might expose the $2,300 round figure and the $2,285 horizontal support. Some follow-through selling will set the stage for the resumption of the recent retracement slide from the all-time peak touched in May and drag the Gold price further towards the $2,254-2,253 zone. 


Fundamental Overview

Gold price (XAU/USD) remains confined in a range during the European session on Friday and consolidates the previous day's strong move up to a two-week high, around the $2,360-2,365 area. The US Treasury bond yields look to build on Thursday's strong move up in anticipation of new supply next week, which, in turn, is seen as a key factor acting as a headwind for the commodity. That said, Thursday's softer US data reaffirmed expectations for an imminent start of the Federal Reserve's (Fed) rate-cutting cycle later this year. This fails to assist the US Dollar (USD) in attracting any follow-through buyers and should act as a tailwind for the non-yielding yellow metal. 

Meanwhile, the Bank of England's (BoE) dovish outlook on Thursday lifted bets for an interest rate cut in August. Furthermore, the European Central Bank (ECB) earlier this month decided to lower borrowing costs and the Swiss National Bank (SNB) also delivered its second rate cut of 2024 on Thursday. This, along with a sustained breakout through the 50-day Simple Moving Average (SMA) on Thursday, favors bullish traders and suggests that the path of least resistance for the Gold price is to the upside. Hence, any corrective slide might be seen as a buying opportunity and is more likely to remain limited as traders look to the flash global PMIs for a fresh impetus.