Gold Price Analysis

Gold Price Analysis June

Tue Jul 20 2021 11:50
Gold is always among the most sought after and valuable commodities in the entire world. If we look at gold returns over the last decade, it has given good returns like many other traded commodities. 

Over time, gold prices have remained volatile and there have been both rising and falling trends. To build the future investment and trading plan, we will dive deep into the June gold price analysis. 

Since the beginning of June, the USD has been strengthening, which has affected the price increase of this metal. 

Last week, gold futures fell to a lower point despite the report of weaker US Treasury yields. The USD posted a good weekly gain for more than a month and there is a reason for that. Most traders believe the US dollar got strong because the Federal Reserve is in session this week. 

Gold Price Analysis for June 

In the analysis for the month of June, gold is showing slightly weaker moves to catch up in the market. Most currency and commodity market traders believe that it is because of the upcoming meeting. 

Traders suspect that it is another monetary policy update from the Federal Reserve. When the two-day meeting ends on June 16, the market will have a much better outlook for gold. 

Gold is also under selling pressure in the market as US inflation data is beating market expectations. If the government continues to perform better, the USD will see a further rise in price. This rise in the price of the USD will result in the dollar experiencing more selling pressure in the market. 

Treasury yield falls to 3-month low 

Hopes of gold returning to the market are still in a haze and there is a strong reason for that. Treasury yields fell to a 3-month low last week. Investors shrugged off the annual jump in the inflation report in the previous session. 

With a jump of nearly 5% in headline inflation reported in the previous session, traders have a bullish outlook. 

Most traders feel that the jump in gold was minor compared to the stock market and the commodity market. With data from Treasury Yield falling to a 3-month low, traders believe that the rise in gold prices will be temporary. 

Economic reopening 

Another important aspect of why gold will fall a little further is the reopening of the economy. As the U.S. government slowly opens up the markets, consumers are scrambling to buy. Be it oil and gas, travel, semiconductors, every industry is seeing growth. 

To give some context: U.S. consumer prices rose in May and it was the largest increase in nearly 12 years. This reopening of the market is boosting economic activity. When the economy gets going again, gold prices will see a correction. 

Not only the U.S., but other countries are reopening their economies and that will affect the price of gold. As market conditions around the world recover, fewer people will invest in safe havens. 

Now people are trying to diversify their portfolios and that could have an impact on the price of gold. If you have a long-term view on gold, then you can invest in June 2021 prices. 

Unemployment is falling 

June 2021 gold prices will also feel the warmth of falling unemployment. As the pandemic takes pressure off the economy, more jobs will be available in the market. According to Labor Department, the unemployment rate is gradually declining. 

The total number of people filing for unemployment is gradually decreasing. This improvement will hit the price of gold in an indirect way. 

However, the decline in the unemployment rate is not directly related to the gold price. But according to some experienced traders and brokers, gold could feel the heat from it. 

Weekly Outlook 

The weekly outlook for the upcoming gold trends looks weak due to the economic reopening. Treasuries and gold price action predict a slightly lower edge for gold. Large amounts of cash are moving in the market as investors and traders are betting on the dovish Fed. 

Because of this action, the rally in the USD rate will be temporary. However, as long as the dollar remains strong, gold will struggle in the market. 

Another reason is the position reduction before the Fed meeting, there is another reason. As the euro sinks in the market, gold is not able to hold stronger positions. Last week European Central Bank sounded dovish. For this reason, the US dollar rose and created pressure on gold. 

Two-day FED session 

The two-day FED session is sure to dominate the behavior of traders and investors. Both fundamental analysis and technical analysis also predict a decline. But before the meeting, the central bank may not take any action. Forecasted core rates and inflation data will move gold, the US dollar and yields. 

Gold (XAU/USD) dives 

As for XAU/USD, the price is persisting around the $1,863 levels after dipping to the weekly low of $1,860. On the other hand, the DXY posted gains of almost 07% for two days in a row. This happened as major market participants sought comfort in the USD on Fed tapering fears. 

Policymakers are set to ease upcoming announcements to support economic growth. This could put more pressure on gold prices in the coming days. 

The S&P 500 has been showing modest growth lately after the economy caught up. Investors believe that growth will become continuous as demand also increases. This indirectly creates pressure on gold to deliver exceptional results. 

Technical Analysis 

The gold metal's significant move below the convergence of the $1,876-75 support level continues to give hope to sellers. The rising line of the last 2.5-month-old trend provides little support to the traders' hopes in the market. 

Conversely, the monthly low at $1,854 may spell a sudden end if gold falls towards the 200-day line SMA at $18.40. A decline is not possible until it bounces back around $18.77. 

One thing every trader should note is that further weakness from the past 200-DMA will make gold more vulnerable. It could retest the February monthly highs, which were near $1.816. 

Is it the right time to invest? 

If you are looking to invest in gold in the short term, then it may not be the right time. With the report announcement just around the corner, gold prices will be volatile. It is better to watch the price trend for a week and then make a decision on this commodity. 

On the other hand, if you are looking for a longer-term option, then the yellow metal is a safer bet. This is because interest rates will be much higher than crude or oil prices. If you are concerned about stocks or gold, then buy gold to play a safer bet. If you are risk averse, then you can invest in Nasdaq and the stock markets. 

Summary - Gold Price Analysis 

Gold won't beat last year's records in June, but it is a stable option in this slowing recovery. Research the economic outlook before taking a position on the price of gold. Keep an eye on the gold price analysis to track the movement before investing. 
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