Fundamental technical analysis:
In straightforward terms, the closest level of support for GOLD is at 1932, and it is expected to hold up well in the near future. The Relative Strength Index (RSI) is still below average, indicating a need for more liquidity for GOLD to continue its decline. The moving averages, specifically the EMA 34 and EMA 89, have crossed over, indicating a downtrend, although it is not entirely clear yet.
Market overview:
XAU/USD maintains its slight gains for the day, trading at familiar levels around $1,950. The improved investor sentiment is a result of recent US inflation figures, which support a more cautious approach from the Federal Reserve. The Consumer Price Index (CPI) increased by only 0.1% MoM in May, slower than expected. Additionally, the Producer Price Index (PPI) contracted by 0.3% in the same month. These numbers suggest that price pressures are decreasing, validating the Fed's aggressive monetary policy implemented in March 2022.
Given this situation, it seems reasonable to expect an end to the tightening cycle, despite indications of a tight labor market that could potentially drive inflation back up. However, due to ongoing financial system pressures, US policymakers have decided to take a more cautious approach, making decisions on a meeting-by-meeting basis.
The price of GOLD is predicted to experience a small uptick before facing a subsequent decline. It's important to note that even a slight increase in value helps maintain liquidity.