Fundamental analysis of XAU/USD

The XAU/USD, which represents the price of gold in U.S. dollars, has limited volatility as it comes under pressure from various factors. After several months of decline, gold prices are trying to make a significant gain as the market cautiously awaits the minutes of the Federal Open Market Committee (FOMC) meeting in June. 

 One of the factors preventing gold prices from recovering is the strength of the U.S. dollar. The dollar index rose by 0.2%, which usually puts downward pressure on gold as it makes the precious metal less attractive for international investors. In addition, concerns about a possible large-scale trade conflict between the U.S. and China, as well as fears about a global recession, are also preventing the XAU/USD rate from rising. At the same time, weaker data from the U.S. and expectations for growth in demand for gold from India and China support gold prices. Market forecasts regarding FOMC meeting minutes are particularly important as the Federal Reserve's stance on rate hikes is of widespread interest. Fed Chairman Jerome Powell has previously noted the possibility of two more rate hikes in 2023, which metal sellers are seeking to confirm in order to regain control.

 High interest rates often make investing in gold less attractive because gold is often seen as a safe haven in times of economic uncertainty. In addition, the world's major central banks are in a tightening cycle with a series of rate hikes aimed at fighting inflation, which could put additional pressure on demand for gold. Despite the limitations, there is a general consensus among investors on the importance of having gold in a diversified portfolio, especially in light of geopolitical tensions. 

 In addition, data indicating that service sector activity in China grew at the slowest pace in five months could also play a role in gold dynamics. As China is the biggest gold consumer, any slowdown in China's economic growth may have a huge impact on demand for the precious metal. As such, the XAU/USD currency pair is in a narrow trading range due to such factors as strong U.S. dollar, global economic conditions and geopolitical tensions. Market participants are closely watching for signals on interest rates from the Fed, which, among other things, will determine the near-term outlook for gold prices.

Technical analysis and scenarios:

With the Alligator indicator showing signs of an uptrend and the Awesome Oscillator (AO) and Accelerator Oscillator (AC) being in the red zone near the zero level (indicating a strong sell signal), there seems to be conflicting signs in the market.

Alternative scenario (BUY)

Recommended entry level: 1932.00.

Take Profit: 1953.00.

Stop loss: 1920.00.

Main scenario (SELL)

Recommended entry level: 1893.00.

Take Profit: 1855.00.

Stop loss: 1920.00.