Gold Prices Finish a Dismal Second Quarter Before the Long Weekend, Where to for XAU/USD?

[MongiIG]

Jul 1, 2022 | DailyFX
Daniel Dubrovsky, Strategist

GOLD, XAU/USD, IG CLIENT SENTIMENT, US PCE DATA, GLOBAL RECESSION WOES - TALKING POINTS:

• Gold prices fell on Thursday despite softer US core PCE data
• The fundamental backdrop remains tough for the yellow metal
• Retail traders remain heavily long gold, a bearish market signal

Gold prices weakened over the past 24 hours, sinking almost 0.6%. It was a soft ending for the second quarter, with the yellow metal weakening 6.66% over the past 3 months. That was the worst performance since the first quarter of 2021. Moreover, XAU/USD remains unchanged from levels achieved in the summer of 2020.

Interestingly, the anti-fiat yellow metal weakened despite a combination of favorable factors. Namely, both the US Dollar and Treasury yields weakened on Thursday. This was in response to softer-than-expected PCE core data. The latter is the Federal Reserve’s preferred inflation gauge, and it showed a sign of cooling underlying price pressures.

That said, sentiment was unable to capitalize on the potential of a less hawkish Fed, perhaps due to rising concerns about a US recession. The Fed is in a tough spot. Due to its inaction on rising inflation from last year, the central bank must pivot more aggressively to compensate for its lack of activity. Moreover, monetary tightening across the globe is not a fundamentally friendly environment for precious metals.

The US Independence Day holiday on Monday is making for a long weekend. Gold volatility could remain subdued before markets close this week. US ISM manufacturing PMI data is due over the remaining 24 hours. A 54.5 outcome is seen for June, down from 56.1 prior. Outside of a material surprise in either direction, XAU/USD may remain glued to prevailing market sentiment

GOLD TECHNICAL ANALYSIS
The decline in gold as of late has brought XAU/USD deeper into the 1787 – 1810 support zone. Clearing this range could be a sign of further pain to come for the yellow metal. Guiding the pair lower has been a falling trendline from March. In the event of a turn higher, this line could reinstate the dominant downside focus. Extending losses would place the focus on the early 2022 low at 1778 before the December low at 1753 comes into play.

XAU/USD DAILY CHART

Chart Created Using TradingView

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Gold Price Technical Forecast: Gold Vulnerable into July

Jun 30, 2022 | DailyFX
Michael Boutros, Strategist

GOLD TECHNICAL PRICE FORECAST: XAU/USD WEEKLY TRADE LEVELS

• Gold price updated technical trade levels - Weekly Chart
• XAU/USD attempting to mark third weekly sell-off – focus is on monthly / weekly close
• New to Gold Trading? Get started with this Free How to Trade Gold -Beginners Guides

Gold prices plunged 0.5% this week with XAU/USD on pace for a third consecutive weekly sell-off into the close of June. The decline takes prices below a key support pivot we’ve been tracking for months now and the threat remains for a deeper correction towards longer-term uptrend support heading into the July / Q3 open. These are the updated targets and invalidation levels that matter on the XAU/USD weekly technical price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this gold technical setup and more.