GOLD Analysis
Afternoon: Gold Prices Under Pressure Amid Fed's Limited Rate Cut Outlook, will it break psychological level 2300?
Highlights:
- Fed's outlook limits to one rate cut this year, delaying until possibly December.
- US producer prices decline in May, indicating easing inflation.
- Gold Fields reduces output target due to weather-related delays in Chile.
Introduction:
Gold prices remain under pressure as the US Federal Reserve has forecasted only one interest rate cut this year. Fed policymakers have postponed the start of rate cuts until possibly December, dashing hopes for two cuts this year despite some progress in containing inflation. In May, US producer prices unexpectedly declined due to lower energy costs, indicating that inflation has calmed after a surge in the first quarter..
Key Economic Data Releases
Upcoming key economic data includes:
- Italian Trade Balance from the Euro Zone
- Prelim UoM Consumer Sentiment
- Prelim UoM Inflation Expectations from the US
Gold Fields' Output Target Reduction
Gold Fields has reduced its yearly output target following severe weather, which slowed the ramp-up at its new Salares Norte mine in Chile. This reduction in output adds another layer of complexity to the gold market dynamics.
Support and Resistance Levels
- Gold prices are expected to find support at $2278 and face resistance at $2332.
- Gold MCX prices are expected to find support at 70600 and face resistance at 71500.
Recommended Action
Sell on a jump around $2315, with a target of $2295, and implement a stop loss above $2330.
Summary
Gold prices are under pressure due to the Fed's limited rate cut outlook and stronger US economic indicators. The Federal Reserve's decision to delay rate cuts until December has tempered market expectations. Additionally, the unexpected decline in US producer prices suggests that inflation pressures are easing. However, disruptions in gold production, such as the reduced output from Gold Fields' Salares Norte mine, could impact supply dynamics. Investors should monitor key economic data releases and technical support and resistance levels for trading opportunities.
Support and Resistance Levels:
