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Gold Technical Analysis: Gold Exposed to Profit-taking Sales

Yesterday, XAU/USD gold futures declined, despite the weakness of the US dollar and concerns surrounding the US debt ceiling. But the price of the yellow metal is likely to decline due to good economic data, even with the credit crunch plaguing the US economy. The yellow metal has been falling in recent sessions as it failed to break its record high since August 2020.

According to the trading, the XAU/USD gold price fell to the support level at $1985 an ounce, before settling around the $1990 level at the time of writing the analysis. Despite the decline, XAU/USD is still up more than 10% year-to-date in 2023. In the same performance, silver prices, the sister commodity to gold, remained above $ 24 an ounce. In general, the white metal wiped out all its gains in 2023 and is now stable throughout the year.

On the economic front, in April, US retail sales rebounded by 0.4%, up from -0.7% in March. But this fell short of market estimates of 0.8%. On an annual basis, retail fell to 1.6% amid slowing sales in the petrol, clothing stores, electronics websites and furniture outlets sectors. The only surprise was US Industrial Production and Manufacturing Production, which jumped 0.5% and 1%, respectively, in April. On a year-over-year basis, industrial production rose 0.2% year-on-year, and manufacturing production declined 0.9%. Capacity utilization increased to 79.7%.

Business inventories fell 0.1% in March, while retail inventories excluding autos rose 0.3%.

Elsewhere, the National Association of Home Builders (NAHB) index rose five points to 50.0 in May, beating market expectations of 45.0. This was the first time the NAHB had headed into positive territory in nearly a year.

Gold prices also failed to benefit from the greenback's decline as the US Dollar Index (DXY) fell 0.06% to 102.37 from an opening of 102.43. Typically, the low index, which measures the greenback against a basket of currencies, is beneficial for dollar-denominated commodities because it makes it cheaper for foreign investors to buy them.

Other factors affecting the gold market

 US Treasury market returns have been mostly high. That's with the benchmark 10-year yield rising 4.7 basis points to 3.555%. One-month notes rose 2.3 basis points to 5.623%, while 30-year notes rose 5.5 basis points to 3.897%.

The gold market in general is sensitive to price movements as they can affect the opportunity cost of holding non-yielding bullion.

Relative to other metals markets, copper futures fell to $3.6895 a pound. Platinum futures contracts rose to 1076.90 dollars an ounce. Palladium futures fell to $1,516.50 an ounce.

XAU/USD gold price forecast today:

  • XAU/USD gold price fell as traders took stock of strong US retail sales data ahead of the key meeting to resolve the US debt ceiling crisis.
  • According to expectations, the XAU/USD gold price may continue to decline until the financial markets get a clear indication that market pressures have started from debt ceiling talks, regional banking concerns, or steady inflation that is weighing on the consumer.
  • Undoubtedly, the stability of the XAU/USD gold price below the $2000 psychological resistance level is a catalyst for the bears to launch downwards.

 According to the performance on the daily chart below, prices fell towards the support levels of 1975 and 1960 dollars, respectively. A clear break of the general bullish trend will occur.

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Mahmoud Abdallah
About Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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