Gold price (XAU/USD) has been struggling to attract follow-through buying despite a combination of supporting factors in recent trading sessions. The Federal Reserve (Fed) rate cut bets have dragged the US Dollar (USD) to a nearly two-month low, but failed to lure XAU/USD bulls. Traders are now eagerly awaiting this week’s important US macro data releases and key central bank event risks, expecting them to provide some direction for the Gold price in the near-term.
The bias for Gold price appears to be tilted in favor of bullish traders amidst firming expectations that the Fed will cut interest rates later this year. The bets were reinforced by recent US macro data indicating a slowdown in manufacturing activity and the economy, leading to a decline in the USD. In addition to these factors, persistent geopolitical risks are supporting the positive outlook for the Gold price and may lead to further appreciation. It is likely that any significant dip in the price of Gold will be viewed as a buying opportunity and remain limited in scope as traders wait for upcoming economic data releases and central bank events.
The signs of easing inflationary pressures and slowing economic growth have increased expectations for an imminent rate cut by the Federal Reserve, which continues to drive flows towards the non-yielding Gold price. The recent US economic data releases, such as the Personal Consumption Expenditures (PCE) Price Index and the ISM Manufacturing PMI, have further fueled these expectations. This has also led to a decline in US Treasury bond yields, pushing the USD to its lowest level since April 10. The geopolitical tensions in the Middle East are providing additional support to Gold as a safe-haven asset.
Looking ahead, traders are focusing on the upcoming US economic releases, including the JOLTS Job Openings and Factory Orders data. The attention will then turn to the US ADP report on private-sector employment on Wednesday, followed by the highly anticipated Nonfarm Payrolls (NFP) report on Friday. In addition, investors will be closely watching key central bank event risks, such as the Bank of Canada (BoC) decision and the European Central Bank (ECB) meeting scheduled for later this week.
From a technical analysis perspective, the Gold price is expected to attract dip-buyers near the 50-day Simple Moving Average (SMA) at around the $2,334 region. Immediate resistance levels are seen at $2,360 and $2,364, with further upside potential towards $2,385 and $2,400. On the downside, the 50-day SMA is expected to provide immediate support, followed by the $2,325 zone and the overnight swing low around $2,315-$2,314. A break below these levels could lead to further losses towards the $2,300 mark and the $2,285-$2,284 region.
Gold has been historically significant as a store of value and medium of exchange, as well as a safe-haven asset during turbulent times. Central banks are major holders of Gold, with emerging economies such as China, India, and Turkey quickly increasing their reserves. Gold has an inverse correlation with the US Dollar and US Treasuries, often rising when the Dollar depreciates. Price movements in Gold can be influenced by factors such as geopolitical instability, economic recession fears, interest rates, and the strength of the US Dollar.
In conclusion, the Gold price continues to face challenges in attracting buying support despite positive factors such as Fed rate cut bets and geopolitical tensions. Traders are closely monitoring upcoming US economic data and central bank events to determine the direction of the Gold price in the near-term. Technical analysis suggests potential support levels near the 50-day SMA and resistance levels at $2,360 and $2,364. Gold remains a key asset for diversification and hedging against economic uncertainties, making it an important component in investors’ portfolios.
