Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited. The US Dollar (USD) meets with a fresh supply and hangs near its lowest level in over a week. This, along with a slight deterioration in the global risk sentiment, lends some support to the safe-haven precious metal. Traders, however, might prefer to wait for more cues about the Federal Reserve’s (Fed) rate cut path before placing aggressive directional bets.
Hence, the focus will remain glued to the key US macro data – the Advance Q1 GDP report due later today and the Personal Consumption Expenditures (PCE) Price Index on Friday. The latter will play a key role in influencing market expectations about the Fed’s future policy decisions, which, in turn, will drive the USD demand and provide some meaningful impetus to the Gold price. This makes it prudent to wait for strong follow-through buying before confirming that the corrective slide from the all-time peak has run its course and positioning for further gains.
From a technical perspective, the Gold price now seems to have found acceptance below the 23.6% Fibonacci retracement level of the February-April rally, albeit showing some resilience below the $2,300 mark earlier this week. Moreover, oscillators on the daily chart – though have been losing traction – are still holding in the positive territory. Hence, it will be prudent to wait for some follow-through selling below the $2,300-2,290 area, or over a two-week low touched on Tuesday, before positioning for an extension of the recent pullback from the all-time peak. The subsequent downfall has the potential to drag the XAU/USD to the $2,260-2,255 area, or the 38.2% Fibo. level, en route to the $2,225 intermediate support and the $2,200-2,190 confluence, comprising the 50% Fibo. level and the 50-day Simple Moving Average (SMA).
On the flip side, immediate resistance is pegged near the $2,325 area ahead of the overnight swing high, the $2,337-2,338 zone. A sustained move beyond could allow the Gold price to test the next relevant hurdle near the $2,350-2,355 region and climb further towards the $2,380 supply zone. This is closely followed by the $2,400 round figure and the all-time peak, near the $2,431-2,432 area, which if cleared will set the stage for an extension of the recent blowout rally witnessed over the past two months or so.
The real Gross Domestic Product (GDP) Annualized, released quarterly by the US Bureau of Economic Analysis, measures the value of the final goods and services produced in the United States in a given period of time. Changes in GDP are the most popular indicator of the nation’s overall economic health. The data is expressed at an annualized rate, which means that the rate has been adjusted to reflect the amount GDP would have changed over a year’s time, had it continued to grow at that specific rate. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.