Gold (XAU/USD) News and Analysis
- Global central banks continue to signal intention to increase gold holdings
- Gold has been trending lower since falling from its all-time highs, and any near-term gains appear to be limited.
- In this article, the analysis Chart Patterns and key Support and Resistance level. For more information, see our comprehensive Education Library
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World Gold Council survey suggests gold holdings are on the rise
The World Gold Council’s annual survey, conducted between February and April and including responses from 69 central banks, showed that despite relatively high gold prices, 29% of central banks expect their nation’s gold reserves to increase – the highest proportion since the survey began in 2018.
Source: WGC 2024
Perhaps one of the most striking findings from the World Gold Council’s annual survey is the widespread expectation by central banks that their gold holdings will increase across the board over the next 12 months: 81% of respondents believe that global central bank gold holdings will increase over the next 12 months, suggesting that the current high prices will not deter banks from investing for long.
The Fed has signalled the possibility of one rate cut this year, or even two, as the dot plot showed the decision lying between two expected outcomes. However, the first rate cut is only expected to come in the fourth quarter, according to the market, meaning the current drop in gold prices may be less urgent unless US data worsens, bringing forward the rate cut and potentially sending gold prices surging again.
Investors tend to view gold more favorably when interest rates fall, as gold is a non-yielding asset – lower interest rates lower the opportunity cost of holding gold, making it more attractive.
Source: WGC 2024
Gold prices give little information – short-term and medium-term trends collide
Gold prices have risen since the NFP low earlier this month, but the overall downtrend remains intact. Prices have been declining in a volatile manner since their all-time high of $2,450 after negative divergences surfaced and signs of a price downturn emerged.
The downtrend has developed amid a series of lower lows and lower highs, with the most recent low recorded on Friday, June 7 (NFP). Since then, the price has attempted to recover and surpassed $2,320, but momentum is lacking, as can be seen by the narrowing pattern. If the blue 50 DMA holds as resistance, gold may sustain its medium-term downtrend and fall.
Recently, gold’s drivers have disappeared. There has been no notable rise in tensions in Eastern Europe or the Middle East, and US data has failed to provide a favorable environment for a rate cut. On the downside, gold bears are eyeing swing lows of $2,287 and $2,287 that could trigger further declines.
Gold (XAU/USD) Daily Chart
Source: TradingView. Creator: Richard Snow
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|
What’s changed |
long |
Shorts |
oh, |
| every day | -1% | 1% | 0% |
| Every week | -16% | 7% | -8% |
— Article by Richard Snow from DailyFX.com
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