Author: Sir Amar – Technical Analyst

Gold prices (XAU/USD) broke the key resistance at $1810 and are aiming to hold above it amid a weaker US Dollar Index (DXY). As investors remain on the side-lines ahead of the release of the June meeting minutes, gold and DXY prices are expected to show wild moves until then. DXY has shown repelling action after falling below the 105.00 psychological support earlier in the Tokyo session. A mild rally is expected to turn lower sooner as the likelihood of an extraordinary rate hike by the Federal Reserve (Fed) has diminished.

As anticipated in the Q2 gold forecast, the main catalyst that propelled gold prices higher in Q1 2022, the Russian invasion of Ukraine, proved to be a short-lived catalyst. The conflict was largely contained to the extent that the European Union, the United States, and NATO were not involved. The price of gold erased all of its gains from the first quarter of 2022 in the second quarter of 2022 and is now virtually flat. The challenge for gold prices in Q3 2022 remains, barring a further escalation of the Russia-Ukraine conflict that will throw the EU, US and NATO into all-out conflict, there are few catalyst bulls on the horizon.

The gold price has removed support from the horizontal support placed at $1805 on June 14th. Going forward, the downward sloping trend line starting from the June 12 high of $1879 will act as the primary barrier for the precious metal. The shiny metal remains firmly stable above the 20-period exponential moving average at $1806. Meanwhile, the Relative Strength Index is attempting to break through 60.00 which will further bolster gold bulls. In a way, not much has changed. To reiterate what was said in the Q2 forecast, it’s hard to see how the environment for gold prices will become more fundamentally attractive unless World War III occurs.