Gold price began the new week on a weaker note due to some US Dollar buying, but managed to stay above the $2,400 mark, close to its highest level since May. Investors are increasingly expecting the Federal Reserve to start cutting interest rates in September, which could limit the USD gains and support the Gold price. Additionally, US political uncertainty following an alleged assassination attempt on former President Trump is causing caution among investors betting against Gold.
The US Dollar saw some buying on Monday, reversing losses to a three-month low and putting pressure on Gold for the second consecutive day. Data from the US Bureau of Labor Statistics showed higher Producer Price Index levels than expected, leading to speculation about a rate cut in September. While political uncertainty in the US favors the Greenback, expectations of a dovish Fed may prevent substantial gains. The market is currently pricing in a high likelihood of a rate cut in September, with support from a recent tame US consumer inflation report. The uncertain US political situation could keep investors wary of riskier assets and support the safe-haven Gold.
In terms of technical analysis, Gold’s dip-buying near the $2,390-2,388 resistance-turned-support level indicates a favorable position. Oscillators on the daily chart are in positive territory and suggest a potential upside for Gold. Any drop below the $2,400 mark may still be considered a buying opportunity, with limited downside potential. On the other hand, a further decline could push Gold towards the $2,358 region and possibly the 50-day Simple Moving Average support near $2,350. Resistance lies at last week’s swing high of around $2,425, with a possible challenge to the all-time peak near $2,450 if surpassed. Continued strength above this level could signal further bullish momentum for Gold.
Traders will be focusing on the release of the Empire State Manufacturing Index in the US for short-term trading opportunities before Fed Chair Jerome Powell’s upcoming speech. The expectation of a rate cut in September and the recent US economic data will likely influence market sentiment. The political uncertainty in the US, along with the dovish Fed expectations, may keep Gold price supported as investors remain cautious. Despite some USD buying, Gold’s technical indicators suggest a potential upside, with buyers likely to be attracted near key support levels. Overall, the Gold market remains volatile, with a mix of economic data, political events, and market sentiment shaping its direction in the coming days.
