Gold prices have recently surged to 2368 USD per troy ounce, marking the second consecutive session of upward momentum. This increase can be attributed to market expectations adjusting to the likelihood of future interest rate cuts by the Federal Reserve. Recent employment data, particularly from ADP, indicated a slower-than-expected growth in private-sector jobs in the US for May, with revisions to April’s figures further adding to the speculation of impending rate cuts. Market participants, as per the CME Group’s FedWatch tool, are now anticipating two rate cuts in 2024, with a 70% probability of easing by September.
Not only US data but also recent movements by central banks globally are influencing gold prices. The Bank of Canada recently announced its first rate cut in four years, while the European Central Bank is expected to follow suit. These actions are adding to the bullish phase in gold prices, as investors closely monitor the decisions made by central banks worldwide.
Analyzing the XAU/USD charts, we observe a breakout in gold prices from a consolidation range above the 2315.00 USD level, with a potential target of 2395.00 USD. The MACD indicator supports this bullish outlook, pointing towards a possible rise in prices. The H1 chart also displays a growth wave towards 2356.20 USD, followed by a consolidation range and another push towards 2378.23 USD. The Stochastic oscillator further hints at continued upward momentum, despite temporary dips.
The surge in gold prices is a result of various market factors, including expectations of US interest rate cuts, global central bank movements, and technical indicators pointing towards bullish trends. Investors should keep a close eye on upcoming economic data releases and central bank decisions, as these events will play a crucial role in determining the short-term price dynamics of gold.