Gold continued its upward trend for the second consecutive day on Friday, supported by the anticipation of potential monetary policy adjustments by the Federal Reserve in September.
US economic data indicates a slowdown, but it is not significant enough to cause concerns about a recession.
Continued geopolitical tensions in the Middle East involving Israel, Lebanon, and Iran are maintaining a strong demand for Gold.
Gold prices rose slightly for the second consecutive day as market participants maintained confidence that the Federal Reserve (Fed) may start to relax its policies during the upcoming September meeting. The ongoing tensions between Israel, Lebanon, and Iran are causing increased demand for bullion as the weekend approaches.
The XAU/USD Is Currently Trading at $2,432, Showing a Slight Increase of 0.22%
The most recent batch of economic data from the United States (US) indicates that the economy is slowing down, but not to the extent that it would cause concerns about a recession. Concerns following disappointing ISM Manufacturing PMI and July Nonfarm Payrolls (NFP) data started to fade away, as evidenced by US stocks recording solid gains towards the end of the New York trading session.
On Thursday, the US Initial Jobless Claims for the week ending August 3 came in lower than anticipated, suggesting that the job market continues to show strength despite a slight slowdown.
Gold prices continue to hold steady due to the decline in US Treasury bond yields and the weakening of the Greenback. The interest rate on the US 10-year benchmark note has dropped by nearly five basis points to 3.944%, while the US Dollar Index (DXY), which gauges the dollar’s performance against other currencies, has declined by 0.10% to 103.13.
According to analysts at ING, Bullion is expected to maintain a positive outlook in the coming months. In their statement, they expressed their belief that Gold will regain its strength in the future, citing ongoing geopolitical uncertainties and the anticipated interest rate cuts from the US Fed as contributing factors.
The ongoing tensions in the Middle East are expected to support the XAU/USD, as recent news suggests a potential increase in the conflict. According to reports, Israeli defense officials have stated that the army is working in collaboration with the Pentagon to develop strategies for possible responses to Iran and Hezbollah.
Meanwhile, traders are preparing themselves for the upcoming data release next week. The economic calendar in the US will be packed as traders keep a close eye on inflation figures for both producers and consumers, retail sales, building permits, and consumer sentiment.
Gold Sees Slight Increase Despite China’s Absence From the Buying Market
- The Producer Price Index for July is anticipated to decrease from 0.2% to 0.1% on a month-over-month basis.
- The Consumer Price Index (CPI) is predicted to decrease slightly from 3% YoY to 2.9%, while the core CPI is anticipated to maintain its downward trend from 3.3% to 3.2% YoY.
- Experts anticipate a rise in US Retail Sales from 0% to 0.3% MoM.
- The price of Gold gained momentum despite reports that China’s central bank refrained from buying Gold for the third month in a row.
- According to the CME FedWatch Tool, the likelihood of a 50-basis-point decrease in interest rates by the Federal Reserve during the September meeting has decreased to 52.5%, compared to 57.5% just one day earlier.
The Price of Gold Is Currently in a Consolidation Phase, Hovering Around the $2,430 Mark.
The upward trend of Gold remains intact, although it encounters strong resistance around the $2,430 mark. Buyers have struggled to surpass this level, which is just shy of the psychological threshold at $2,450. The Relative Strength Index (RSI) indicates that there is an increasing momentum among buyers, suggesting that prices are likely to rise.
If buyers manage to surpass the $2,450 mark, the next target would be the August 2 peak at $2,477, followed by a test of the all-time high at $2,483. Additionally, the opportunity to obtain the $2,500 amount is available.
On the other hand, if XAU/USD falls below the 50-day Simple Moving Average (SMA) at $2,370, it could potentially amplify the downward trend. This could then bring the 100-day SMA at $2,349 into play, followed by a support trendline around $2,320. If this level is broken, the next support will be found at $2,300.