On Thursday, June 27th, the gold price quickly rebounded by 1.2% from the two-week low touched in the previous trading day, closing at $2,327.46 per ounce. Some weak data released by the United States on Thursday stimulated gold's rebound. A number of data released in the United States on Thursday highlighted the weakening economic momentum: new orders for US manufacturing unexpectedly fell in May, indicating a weakening of enterprise equipment spending in the second quarter. Excluding aircraft and military hardware, the monthly rate of new orders for core capital durable goods in May dropped by 0.6%, marking the largest decline so far this year. Economists surveyed by Reuters had previously predicted a slight growth of 0.1%. The US Labor Department said that for the week ending June 22nd, the number of initial state unemployment claims fell by 6,000, and after seasonal adjustments, it was 233,000. For the week ending June 15th, the number of continuing claims for unemployment insurance increased by 18,000, reaching 1.839 million after seasonal adjustments, the highest level since the end of November 2021. The US Department of Commerce's Bureau of Economic Analysis announced the third estimate of first-quarter domestic gross domestic product (GDP), confirming that economic growth slowed significantly in the first quarter, and the GDP report also showed weak consumer spending. US consumer spending growth was revised down from 2% to 1.5%. The soft data on that day caused the US dollar index to fall by 0.2%, and the yield of the benchmark 10-year Treasury bond fell to 4.2845%, slightly boosting gold's attractiveness to investors holding other currencies. According to FedWatch data from London Stock Exchange Group (LSEG), although the Federal Reserve is expected to cut interest rates only once this year, investors largely adhere to the view of cutting interest rates by about two times. Next, investors are still mainly waiting for the announcement of the US Personal Consumption Expenditures (PCE) Price Index on Friday, because the market seems to be more concerned about personal consumption data than other aspects. If PCE is also weak, this will definitely be the best evidence of the US economic slowdown, and further increase the bet on the Fed's interest rate cut. Therefore, this key data on Friday will determine whether gold continues to decline or further rebounds.

On the technical side, looking at the daily chart, although the gold price rose on Thursday, it is still under pressure below the middle channel of the Bollinger Band. The Relative Strength Index (RSI) of technical indicators is below the 50 midline, indicating that the momentum is still in favor of the sellers. The initial support below is at the low point of $2,293 per ounce on Wednesday. Once it falls below this level, the downside target will be the low point of $2,277 per ounce on May 3rd, followed by the high point of $2,222 per ounce on March 21st. On the contrary, if gold recovers $2,350, it will turn to higher key resistance levels, such as the cycle high of $2,387 per ounce on June 7th. Once this resistance is breached, the gold price will have the potential to challenge $2,400 per ounce or even higher levels.

Source: E-huitong

From a technical perspective, although the gold price rose on Thursday, it is still under pressure below the middle channel of the Bollinger Band on the daily chart. The Relative Strength Index (RSI) of technical indicators is below the 50 midline, indicating that the momentum is still in favor of the sellers. The initial support below is at the low point of $2,293 per ounce on Wednesday. Once it falls below this level, the downside target will be the low point of $2,277 per ounce on May 3rd, followed by the high point of $2,222 per ounce on March 21st. On the contrary, if gold recovers $2,350, it will turn to higher key resistance levels, such as the cycle high of $2,387 per ounce on June 7th. Once this resistance is breached, the gold price will have the potential to challenge $2,400 per ounce or even higher levels.

Wang Gang, Bank of China Guangdong Branch

For personal views only, not representative of the views of the organization.