Gold prices are currently hovering near a two-week high, with expectations of a September rate cut by the Federal Reserve providing support to XAU/USD. The recent rise in US bond yields has bolstered the USD, thereby capping the upside for gold.
Economic Indicators
The latest economic data released in the US has had a significant impact on gold prices. Reports from the US Department of Labor, Commerce Department’s Census Bureau, and the Philadelphia Fed Manufacturing Index have all pointed towards a slowdown in various sectors of the economy. Furthermore, tepid US Retail Sales figures and easing inflation have kept the possibility of a September rate cut on the table, further supporting the price of gold.
Despite some policymakers having a more hawkish outlook, market expectations are pricing in the possibility of a rate cut at the December policy meeting. Minneapolis Fed President Neel Kashkari believes that the US economy has shown resilience but inflation might take some time to reach the target of 2%. On the other hand, Richmond Fed President Tom Barkin asserts that the central bank has the necessary tools to address policy issues while maintaining a data-dependent approach.
Technical Analysis
From a technical standpoint, the gold price has broken above the 50-day Simple Moving Average (SMA), indicating a bullish trend. Oscillators on the daily chart are also showing positive traction, further supporting a potential upward movement in the price of gold. The next hurdle for gold is expected to be around the $2,378-2380 region, with a possibility of aiming towards the $2,400 mark. However, the 50-day SMA acts as immediate support, followed by the $2,336-2,335 region. A significant break below the latter could lead to a further decline towards the $2,300 mark and the $2,285 horizontal support.
Investors are eagerly awaiting the release of flash PMI prints to gauge the health of the global economy, which could provide additional impetus for gold prices. Overall, the economic data releases, alongside Fed’s outlook and market expectations, are likely to have a significant impact on the future direction of gold prices.
Gold prices are currently influenced by a combination of economic data, central bank policies, and market sentiment. While the recent rise in US bond yields has put pressure on gold prices, expectations of a rate cut and signs of economic slowdown continue to support the precious metal. Traders should closely monitor upcoming economic releases and Fed statements to gauge the future trajectory of gold prices.