Gold prices have remained steady this week after taking support at $1800. Gold showed no significant or lasting reaction to a weaker-than-expected revision to U.S. first-quarter GDP which came in down 1.5%, year-on-year. There has been weak US and Chinese economic data this week, particularly the U.S. housing market which continues to see significantly slowing momentum as the number of consumers who are starting the process of buying a home fell dramatically in April. Pending Home Sales Index fell to 99.3 in April, down 3.9% from March. The gold market is starting to see some new bullish momentum as the latest housing market data is the latest in disappointing news.
FOMC minutes this week suggested Fed policy makers are confident in the US economy and do not see rate hikes dragging the US economy into recession. According to the minutes, the Committee continues to see upside risk for inflation and a growing threat to the economy. The members said it would be appropriate to raise interest rates by 50 basis points at the next couple of meetings. Despite this gold managed to sustain above $1840 while we did not see any strong move in USD. Market participants have already factored in two 50 basis point rate hikes from the Fed.
We are neutral next week in Gold and we might see some headwinds coming as the US Fed’s next meeting comes near. The US Fed has the next FOMC meet on 8-9th June and another 50 bps rate hike is on the cards. So in USD and Treasury yields we will see some more up move. Gold has been resilient so far as it has not breached $1800 but below that would open doors till $1765 and $1750. There aren’t any strong fundamentals to shoot prices up but there aren’t any strong fundamentals to break down the prices either. That is why gold is stuck in range and next week would not be any different. In MCX, Gold prices are trading around the 20-day and 50-day moving average. RSI_14 is at 49 which again reiterates the neutral stance. 51500 is the immediate resistance while 50000 seems to be immediate support. Range bound movement is expected next week and any fresh positions could be taken after the prices break the range of 50000-51500.
