Gold Prices Expected to Remain Volatile Amid Economic Uncertainty

Key Takeaways

• Gold prices impacted by dollar strength and risk appetite
• Uncertainty could support gold prices despite potential volatility
• Fed’s inflation target may result in weaker gold prices in 2023

Overview

Gold prices fell on Wednesday as concerns over the global banking crisis eased, boosting investor appetite for riskier assets.

At 07:05 GMT, June Comex gold is trading $1978.50, down $11.90 or -0.60%. The XAU/USD is at $1960.32, down $11.745 or -0.60%. On Tuesday, the SPDR Gold Shares ETF (GLD) settled at $183.42, up $1.47 or +0.81%.

Investors Hedging Against Uncertainty Amid Global Banking Crisis and Inflation Concerns.

However, some investors are still holding onto the precious metal as a hedge against any potential future economic uncertainty.

The strengthening of the dollar has made gold more expensive for overseas buyers. Meanwhile, Asian shares surged on Wednesday, a sign of increasing appetite for riskier assets.

While gold is ultimately expected to be supported by financial uncertainty, its prices could become more volatile over the coming weeks if inflation and US economic data remain elevated.

Analysts predict that the Federal Reserve will prioritize bringing inflation back to target, resulting in cyclically weaker gold prices through the second half of 2023.

However, some believe that the Fed will face a difficult choice between higher inflation, a harder landing, or financial instability, prompting gold to retest and even pierce all-time highs this year.

Daily June Comex Gold Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $2031.70 will signal a resumption of the uptrend. A move through $1953.70 will change the main trend to down.

The minor range is $2031.70 to $1953.70. Its retracement zone at $1992.70 – $2001.90 is resistance.

A second minor range is $1906.00 to $2031.70. Its 50% level at $1968.90 is potential support.

The short-term range is $1906.00 to $2031.70. If the main trend changes to down then its retracement zone at $1931.00 to $1907.20 will become the next downside target.

Daily June Comex Gold Technical Forecast

Trader reaction to the minor 50% level at $1992.70 is likely to determine the direction of the June Comex gold futures contract on Wednesday.

Bearish Scenario

A sustained move under $1992.70 will indicate the presence of sellers. The first downside target is $1968.90, followed by the main bottom at $1953.70.

Taking out $1953.70 will change the main trend to down. This could trigger a break into the main retracement zone at $1931.00 to $1907.20. Watch for a technical bounce on the first test of this area.

Bullish Scenario

A sustained move over $1992.70 will signal the presence of buyers. The first target is $2001.90. Overtaking this level will indicate the buying is getting stronger. This could trigger an acceleration into the minor top at $2023.90, followed by the main top at $2031.70.

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