Despite the clear downward trend that began towards mid-April, the value of gold managed to end the month of June slightly positive thanks to the rally that began at the support level at €68.24 per gram. Despite this, it is possible to see that the downtrend is still clearly defined, inducing a wedge structure that could cause a break-out during the month of July. Among the macroeconomic factors that could most influence the value of gold are American monetary policy and purchases of gold by central banks.
- During the month of June the value of gold increased by approximately +1.4% returning to close near €70 per gram.
- From a technical analysis point of view, gold’s rapid upward rally towards the absolute ceiling was abruptly interrupted by the horizontal resistance at €72.15 per gram, near which the precious metal performed a trend reversal and started to move towards its support level at €68.25 per gram. Subsequently, gold’s uptrend regained strength until it returned above the 50-day moving average and tested the diagonal resistance level.
- From a fundamental point of view, however, it will be crucial for gold that American inflation continues to proceed according to expectations, signaling a progressive reduction in interest rates towards the Federal Reserve’s target of 2%. This development would raise expectations about the Federal Reserve’s upcoming cuts, increasing demand for gold. Keep up to date on the latest news from the best Italian brokers today.
A Sharp Improvement in US Inflation is Crucial to the Value of Gold!
In the first 3.5 months of the year, the value of gold gained more than 20%, far outperforming the stock market, a very rare event that prompted a rapid influx of institutional investors into the commodity market to capitalize on this volatility.
To date, analysts report that the majority of these investors have not yet sold their gold position thanks to the consolidation period which managed to maintain above the €68.24 per gram level, but if a break-out were to occur to the downside and a clear invalidation of the downtrend many people argue that a gold sell-off could occur.
Precisely for this reason, the next results of American inflation will be crucial for the technical analysis of gold. For example, if the US PCE inflation data were to increase from 2.7% to 3% this afternoon, despite the market expecting a reduction to 2.6%, the market’s expectations regarding the next Federal Reserve cuts in 2024 would be erased, inducing a collapse in demand for gold and a possible downward break-out.
Despite this, many analysts argue that inflation data is expected to significantly improve in the coming months, potentially painting a positive scenario for the precious metal. Scroll through the list of best XAUUSD and XAUEUR brokers to start trading gold today.
Gold Continues Rally but Reports Strong Slowdown
Despite the optimism induced by the macroeconomic news, the technical structure still appears very balanced without indicating a specific direction.
In fact, to date the price of gold per gram is within a period of consolidation led by a wedge structure in the chart pattern with horizontal support and a diagonal resistance level further strengthened by the 50-day moving average.
Considering this technical structure, the value of gold could continue its consolidation level until a breakout from the wedge structure, potentially to the upside after positive macroeconomic announcements.
Furthermore, the possibility of a continuation of the consolidation period would also appear to be supported by the technical indicators MACD, RSI and EFI, which do not signal any divergence or crossover and which all present very balanced values without indicating a possible correction or rally in the short term.
Gold Monthly Outlook
- Current resistance level: €71.10 per gram, identified by the historical key diagonal level that has characterized the upward trend of gold over the last 4 years. In addition, this level is also strengthened by the ascending diagonal resistance identified between April and June.
- Current support level: €68.24 per gram, identified by the confluence of support formed by the key horizontal level and the 50-day moving average.
- Upside target: €72.15 per gram, the resistance zone at which the value of gold reversed its trend after reaching its all-time high.
- Downside target: €68.24 per gram.
Considering all the factors we have discussed in this analysis, July could open with a positive push towards the resistance level if this afternoon’s US inflation data surprises the market positively. Despite this, during July the trend of gold could be mainly characterized by a consolidation in the wedge structure waiting for a break-out. Check the list of CONSOB authorized trading platforms to trade with our July forecasts.
See the gold price forecast for 2024.
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