The demand for physical gold in major markets like India and China remains low due to high prices and a lack of significant cultural buying triggers, although a slight increase in Chinese market premiums indicates potential future demand increases.
Key Points
- Gold prices remained stable as investors awaited U.S. inflation data that could influence interest rates and gold’s investment appeal.
- Market cautiousness reflected in gold’s minor price changes, influenced by anticipation of key economic data releases.
- Today’s focus is on the PCE report, which could affect gold prices depending on whether it suggests imminent interest rate hikes or delays.
Gold Daily Price Analysis – 31/05/2024
Gold prices displayed minimal movement on Friday, maintaining a flat trajectory as market participants held their positions in anticipation of the U.S. inflation data. This crucial report is expected to significantly impact the U.S. interest rate outlook, which in turn influences gold’s appeal as an investment. Despite this stagnation, gold is on track for its fourth consecutive monthly gain, underscoring its enduring allure during times of economic uncertainty.
Yesterday, gold closed at $2,366.5, slightly up by 1.08% from the opening price of $2,361.0. However, today’s trading session saw a slight decline, with the current price at $2,363.6 after opening at $2,364.5, marking a modest change of -0.12%. This price behavior indicates a cautious market, wary of making significant moves before the release of key economic data.
Gold’s current market behavior can be partly attributed to speculative flows primarily from China. This trend seems to diverge from traditional economic indicators, suggesting that other factors, like geopolitical tensions or shifts in speculative market dynamics, could be at play. Additionally, the U.S. dollar’s slight rise to a near two-week low has made gold more costly for holders of other currencies, potentially dampening demand.
The retail appetite for physical gold remains subdued due to high prices, particularly in significant markets like India and China. In India, the lack of major festivals and high domestic prices have led to continued discounts on gold prices despite the wedding season typically boosting demand. Conversely, in China, there has been a slight increase in premiums on gold, indicating a bit of a pickup in demand, which could be a precursor to more robust activity should the Chinese central bank cut interest rates in the future, as anticipated by experts like Bernard Sin of MKS PAMP.
Key Economic Data and News to Be Released Today
Today’s PCE report is the primary focus for traders. A higher-than-expected PCE reading could strengthen the dollar and push gold prices lower as the market anticipates more aggressive interest rate hikes. Conversely, a lower-than-expected reading could boost gold prices by reducing the likelihood of imminent rate increases. Other significant economic indicators include U.S. GDP data, which, if revised downward, could further support gold as a safe-haven asset amidst economic uncertainty.
Gold Technical Analysis – 31/05/2024
Looking at the price action on Gold, it’s clear that the asset is in a correction phase, even though the price is trending above the 200 EMA. This means that, there’s a higher probability of price to breakout to the upside.
Additionally, the RSI is stuck around the 50 midrange. In this scenario, short-term traders should carefully wait for a breakout above the 2.369.1 level before committing to a long position or a break below the 2358.0 level before looking to short the bullion.
Gold Fibonacci Key Price Levels 31/05/2024
Short-term traders planning to trade gold today should keep a close eye on the following key price levels for the day:
| Support | Resistance |
| 2349.6 | 2372.8 |
| 2342.4 | 2380.0 |
| 2330.8 | 2391.6 |
Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.
