empty
21.06.2023 12:41 PM
Gold: Will consolidation be ending soon?

The fewer clouds gather in the sky of the U.S. economy, the worse it is for gold. The precious metal continues to trade in a narrow range and awaits cues from Jerome Powell. Gold is ready to react sensitively to the words of the Fed Chairman, but in reality, monetary policy will depend on incoming data. And the current statistics suggest that the risks of a decline in XAU/USD quotes appear higher than the likelihood of their growth.

There is ample evidence that the U.S. economy is improving, not worsening. The leading indicator GDPNow from the Federal Reserve Bank of Atlanta signals that GDP will grow by 2% in the second quarter, which is much higher than the expected contraction of the economy forecasted by Bloomberg experts in April. Preliminary data from the University of Michigan indicate improving consumer sentiment and slowing inflation expectations. Even the real estate market, which is very sensitive to interest rates, shows signs of life.

A soft landing looms on the horizon, and that's bad news for gold. The main drivers of its rally in 2022–2023 were the armed conflict in Ukraine, fears of a recession and inflation, as well as tense relations between the U.S. and China. And while geopolitics has not lost its power, slowing prices and decreasing the likelihood of a downturn make the "bullish" positions on XAU/USD vulnerable.

However, there are plenty of optimists in the market. According to Bloomberg Economics, the most aggressive tightening of the Fed's monetary policy will trigger a deep recession in the second half of 2023. As a result, gold will not only break through $2,000 but also soar to a new record of $3,000 per ounce. Central bank activity and physical demand will support it.

Unfortunately, for now, in my opinion, such a scenario seems unreal. Yes, central banks made record purchases of precious metals in 2022, totaling 1,136 tons. However, in the first quarter, the figure dropped to a modest 228 tons. Against the backdrop of China's slower-than-expected economic recovery, the activity of retail gold sellers is declining.

Dynamics of retail gold sales in China

This image is no longer relevant

Without support from the physical asset market, "bulls" on XAU/USD will struggle to cope with the Fed's aggressive "hawkish" rhetoric, especially since the dynamics of ETF holdings leave much to be desired.

This image is no longer relevant

Strong macroeconomic statistics from the United States will continue to hit the precious metal. It will convince investors of the economy's resilience and allow the Fed to do what it forecasts: raise the federal funds rate by a total of 50 basis points in two FOMC meetings this year. Fears that Jerome Powell will appear before Congress in "hawkish" suit are troubling the "bulls" on XAU/USD.

Technically, the daily chart of gold still shows the pattern of Spike and Ledge. The sentiment remains "bearish" as the quotes are below the moving averages. In such a situation, selling opportunities will arise either with a breakout of the lower boundary of the consolidation range at $1,930–$1,970 per ounce or a rebound from the EMA near $1,950 and $1,956.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

XAU/USD. Analysis and Forecast

Gold is declining below the $3300 level today. U.S. PCE data met expectations. A shift in trade flows is helping the U.S. dollar regain positive momentum. This is also undermining

Irina Yanina 17:37 2025-05-30 UTC+2

Inflation Is Almost Under Control

While the euro continues to hold its ground against the dollar, European Central Bank (ECB) Governing Council member Fabio Panetta indicated during an interview today that inflation in the eurozone

Jakub Novak 13:40 2025-05-30 UTC+2

USD/CAD. Analysis and Forecast

The USD/CAD pair is attempting to regain positive momentum today, though traders remain cautious ahead of the key U.S. Personal Consumption Expenditures (PCE) Price Index release. As a preferred inflation

Irina Yanina 13:22 2025-05-30 UTC+2

EUR/USD. Analysis and Forecast

The EUR/USD pair continues to struggle to recover after rebounding from the 1.1200 level reached earlier, showing a moderately negative bias, although the decline remains limited. The U.S. dollar

Irina Yanina 13:19 2025-05-30 UTC+2

Legal Disputes Between Trump and Companies Over Tariffs Will Negatively Impact Markets (There Is a Likelihood of Continued Decline in Bitcoin and Litecoin Prices)

Global markets are significantly influenced by events occurring in the United States, where both political and economic spheres continue to swing like a pendulum. Earlier this week, after the U.S

Pati Gani 11:11 2025-05-30 UTC+2

More Time is Needed

Dallas Federal Reserve Bank President Lorie Logan indicated yesterday that it might take some time before policymakers understand how the economy will react to tariffs and other policy changes

Jakub Novak 10:53 2025-05-30 UTC+2

The ECB Should Not Delay Rate Cuts

While the euro is trying to regain its monthly highs after a fairly significant correction seen this week, a survey of several economists shows that the European Central Bank

Jakub Novak 10:49 2025-05-30 UTC+2

Markets Demand an Appeal

The S&P 500 started the day strong but ended on a downbeat note. Initially buoyed by the U.S. Court of International Trade's ruling that the White House's tariffs were illegal

Marek Petkovich 10:33 2025-05-30 UTC+2

What to Pay Attention to on May 30? A Breakdown of Fundamental Events for Beginners

Several macroeconomic reports are set to be released on Friday, but none are deemed particularly significant. In Germany, the inflation report for May will be released, with expectations

Paolo Greco 06:51 2025-05-30 UTC+2

GBP/USD Overview – May 30: Justice Has Prevailed, but for How Long?

The GBP/USD currency pair closed below the moving average line on Thursday, and the dollar strengthened for three consecutive days. However, everything changed in the second half

Paolo Greco 03:51 2025-05-30 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.