Tech Beat: Gold outlook

June 17, 2023 (MLN): The following is an outlook for international spot gold (XAU/USD) based on technical analysis (historical quantitative data).

XAU/USD Daily time-frame chart:

XAU/USD Weekly time-frame chart:

International spot gold bounced off the support zone of $1928, which was the range high of January-February 2023.

This was coupled with the European Central Bank (ECB)’s decision to raise all three key ECB interest rates by 25 basis points on Thursday, with the refinancing interest rate now at 3.75%-4%.

Although this hike came largely in line with the market’s expectations, wherein the market participants were expecting a 25 bps hike, however, the gold rally started immediately after the rate decision, climbing 2.2% from the lows before the rate hike.

However, gold is approaching the key resistance level of $1975, and the price action around this level will indicate the current state of the market.

This level has remained very crucial, with it also being range high since 2020.

Spot gold closed at $1957 on Friday, with a 0.18% decline on the week.

With short-term (daily time-frame) technicals giving a buy stance, however, losing the $1928 level will open the way for a sharp move towards $1860 area.

Technical terms used

Moving average (MA): A calculation that takes the arithmetic mean of a given set of prices over a specific number of days in the past.

Exponential moving average (EMA): A weighted average that gives greater importance to the price of a stock in more recent days, making it an indicator that is more responsive to new information.

Volume weighted average price (VWAP) It is just a moving average but puts Volume into the calculation.

Point of control (POC): It is the price level at which the greatest number of contracts are traded during a given trading period.

Relative strength index (RSI): It compares a security’s strength on days when prices go up to its strength on days when prices go down.

High Volume Node (HVN): It refers to the price at which the largest amount of volume occurred

Disclaimer: The opinions in this article are the author’s and do not necessarily represent the views of Mettis Link News (MLN).

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