The Gold Price (XAU/USD) is facing challenges as it tries to rebound from a multi-month low reached last week. Traders are eagerly awaiting the release of the Federal Open Market Committee (FOMC) Minutes for the June meeting, which is causing pre-event anxiety in the market. Additionally, concerns about a potential trade war between the United States and China, as well as worries about the global economic slowdown, are further pressuring the XAU/USD price.
On the other hand, there are some factors that could support the Gold Price. Softer US economic data and expectations of increased Gold demand from India and China over time are providing a floor for the price of the precious metal. However, to regain control, sellers of Gold need confirmation of Federal Reserve Chairman Jerome Powell’s hawkish statements, particularly his mention of “two more rate hikes in 2023.” In order to achieve this, they would also have to break through the key support level of R35,912.
It is important to note that the US markets were closed the previous day, resulting in a lack of major catalysts and further limiting the movements of XAU/USD. Market participants are eagerly awaiting the resumption of full market activity to gain more direction.
Gold Price: Key Levels to Watch in South Africa
Our Technical Confluence Indicator indicates that the Gold Price is currently encountering a short-term key resistance level around R36,198 . This level includes the Fibonacci 23.6% on a one-day timeframe, the Fibonacci 38.2% on a one-month timeframe, as well as the previous high on a four-hour chart.
If the price manages to break above this resistance level, the previous weekly high of approximately R36,305 may act as a catalyst for further upward movement. The next significant level to watch is the Fibonacci 61.8% on a one-month timeframe, which is often referred to as the golden Fibonacci ratio, located around R36,527.
It is worth noting that a potential upside move beyond R36,527 could generate substantial bullish momentum, potentially pushing the price towards the previous monthly high of R37,070.
On the downside, the 10-day moving average (10-DMA) and the Pivot Point one-day S1 are currently acting as immediate support levels, preventing a further decline in the Gold Price near R35,912.
However, if the price breaks below R35,912, further confirmation would be required from the R35,821 support confluence, which consists of the Pivot Point one-day S2 and the Fibonacci 23.6% on a one-month timeframe.
In the event that the Gold Price remains weak and falls below the critical support level of R35,821, there is a possibility that XAU/USD could decline towards the R35,582 threshold.
Overall, the Gold Price is facing challenges as traders await the release of the FOMC Minutes and monitor the ongoing trade tensions between the US and China. The price is currently struggling to extend its recovery, but factors such as softer US data and increasing Gold demand from India and China could provide support. Traders will closely watch key levels, both on the upside and downside, to gauge the direction of XAU/USD in the coming days.