Gold Technical Outlook – Can $1,850 Lead an Uptrend?

Spot gold is rising during the New York session but fails to challenge the weekly highs and remains anchored near the 20-day moving average (DMA) at $1848.48. XAU/USD is currently trading at $1852.28 per troy ounce. The reading for US Core PCE was in line with expectations but lower than the March reading. In an optimistic market climate, European and American equities continued to rise.

The US Department of Commerce has released the Core Personal Consumption Expenditure (PCE), the Federal Reserve’s preferred inflation gauge. The figures are better than expected, indicating that prices remain high, increasing by 4.9% in May (annualized), but below the rate of 5.1% recorded in April.

Will the Fed tighten conditions more slowly now that inflation appears to be falling from four-decade highs? Meanwhile, according to the Fed’s May minutes, all members agreed to raise rates by 50 basis points at each of two consecutive monetary policy meetings.

XAU/USD

Meanwhile, the US Dollar Index, which measures the value of the US dollar against its peers, recouped some of its early-day losses and was up 0.07% at 101.827. Failure to recover above 102.500 would allow a retest of the April 24th low at 99.818.

Contrary to the USD’s gains, US Treasuries yields indicated that investors pulled back from expectations of a US central bank rate hike. The 10-year US Treasury yield was nearly flat for the day, down to 2.743%, a plus for the non-yielding metal, which is benefiting from lower yields.

Moreover, the US economic record revealed new information. Consumer spending rose 0.9% last month, beating expectations as consumers increased their purchases of goods and services, a sign that could support U.S. economic growth in the second quarter amid growing concerns about a recession.

Gold Technical Outlook

gold XAU/USD The price faced negative pressure in previous sessions, testing the key support at 1850.00. However, price is now consolidating past this support as the EMA50 protects the recently suggested positive scenario, and Stochastics is starting to provide overlapping positive signals.

Due to these factors, we recommend a bullish bias in the coming sessions, with a target of 1890.00 as the next major station. However, a breakout of 1850.00 followed by 1838.10 will stop the expected rise and force the price lower.

Today’s trading range should be between the support at 1835 and the resistance at 1880. Good luck!

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