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Gold tumbles below $2,300 an ounce and struggles to regain its positive momentum

27 Jun,2024
Gold tumbles below $2,300 an ounce and struggles to regain its positive momentum

Gold prices fell below the main levels on Thursday, as traders are still biased to acquire the strong USD before the issuance of the main inflation data, which is likely to affect the future of the decision to reduce interest rates on federal funds.

- The spot price of gold fell to $2,298.86 an ounce, while gold futures, which ended in August, decreased by 0.2 % to $2,309.35 an ounce. Metal prices remained under pressure, as the dollar rose to its highest level in about two months this week near the 106.06 mark.

- The flows to the USD were mainly driven by the expectation of the Personal Consumption Expenses (PCE) Index data, which is scheduled to be released tomorrow, Friday. This reading is the preferred scale of inflation of the Federal Reserve, and it may consider the position of the U.S. federal on interest rates. 

- Expectations indicate that personal consumption expenses may show that inflation has calmed down at a moderate pace in May. Still, it remained higher than the annual goal of the Federal Reserve of 2%.

- The stubborn inflation gives the Federal Reserve Bank a stronger justification to maintain high interest rates for a longer period, which is a negative scenario for gold and precious metals. High interest rates raise the cost of an alternative opportunity to invest in assets that do not bring back gold, which makes traders more biased towards the USD.

- On the other hand, silver futures decreased by 0.5 % to $ 29.117 an ounce.

Gold's Technical Analysis

- From a technical perspective, gold is struggling to stabilize above level of $2,294 an ounce, and as long as the price moves above $2,300, then the long target from $2,294 levels shall be $2,305, then $2,311 an ounce. The upward path can extend more toward a $ 2,345 an ounce zone.

- In the alternative scenario, if gold fails to persist above the level of $2,300, then it targets the support level of $2,285 then 2,250 an ounce. Some subsequent short positions may cancel the long scenario and allow the return to re-test the bottom at $2,200 an ounce.

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