Gold (XAU/USD) price is currently consolidating after a rejection from the $2000 in May 2023. After closing May with a 1.35% loss, the bulls are trying to orchestrate a strong rebound. The price is retesting a key trendline, and a breakdown will be extremely bearish.
Gold price per ounce is showing high volatility once again after closing last week with minor gains. After a rising at the start of the week, the XAU/USD pair tumbled 1.17% on Wednesday, However, on Thursday, bullion had a bounce and was trading 0.27% higher till press time.
Gold and Silver are safe haven assets that show an inverse correlation with the dollar strength index. Recently, the DXY Index has rebounded after tagging its yearly lows. The resulting bounce has sent the index to its highest level since March 17. This has proved to be a major headwind for Silver and Gold.
In the coming days, I expect the Gold price to remain very volatile due to the next week’s FOMC meeting. Ahead of this key interest rate decision, the May 2023 CPI data is also be released which will reveal the inflation stats for the last month.
The XAU/USD chart reveals that the pair has bounced from the upward trendline. However, the bulls couldn’t keep momentum and the price is now back below $1,950 The latest analysis reveals that the bulls need to hold $1930 or there will be a possibility of a drop to $1,850.
My Gold price forecast will remain bullish as long as the price holds the trendline shown on the following chart. A break below this line may trigger a deeper pullback to $1850, the 0.5 Fib retracement level. Close attention must also be given to the actions of the US Federal Reserve and the dollar strength (DXY) index which is gaining strength.
I’ll keep posting my updated outlook on Gold and other assets in my free Telegram group, which you’re welcome to join.
This post was last modified on Jun 08, 2023, 09:02 BST 09:02