Gold price remains under pressure, with modest USD strength limiting any significant gains. However, the downside appears to be limited as September Fed rate cut bets could cap further USD gains and provide support to XAU/USD. Traders are exercising caution ahead of key central bank events and important macro data.
The Gold price struggled to break above $2,400 as USD demand increased, alongside a positive risk tone that weakened the safe-haven appeal of the precious metal. Despite these factors, ongoing geopolitical conflicts in the Middle East offered some support to Gold. The growing expectation of a Fed rate cut in September, supported by a mild US inflation report, restrained USD gains and helped stabilize Gold prices. Traders are waiting for the outcome of the upcoming FOMC meeting before establishing a clear direction for XAU/USD.
Investors will closely watch the Bank of Japan and Bank of England decisions, along with US macro releases like the Nonfarm Payrolls report as indicators of the global economy’s health. These events will determine the next move for Gold prices. Additionally, data releases at the beginning of the month will provide further insights and influence Gold’s directional movement.
The US Dollar reached a two-and-a-half-week high amid a positive risk tone, but failed to support Gold prices above $2,350. Geopolitical tensions in the Middle East, including Israel’s response to attacks, and easing price pressures in the US reaffirm expectations of a Fed rate cut in September. This scenario is keeping US Treasury bond yields low, which could limit USD gains and support Gold prices. Traders are awaiting key central bank events this week for market direction.
From a technical standpoint, Gold prices need to break below the 50-day SMA to confirm bearish momentum. Further downside could test support levels around $2,325 and $2,300. On the upside, a break above $2,400 could lead to resistance at $2,412 and $2,432 before challenging the record peak levels. The outcome of central bank meetings and macro data releases will provide further clarity on Gold’s price direction.
Gold has historically been used as a store of value, medium of exchange, and safe-haven asset. Central banks are major holders of Gold, using it to diversify reserves and strengthen currency stability. Gold has an inverse correlation with the USD and US Treasuries, making it an attractive asset during times of currency depreciation. Various factors like geopolitical events, interest rates, and the USD’s performance influence Gold prices. Overall, the upcoming central bank events and economic data releases will be crucial in determining future moves for Gold prices.
