Gold price failed to continue its upward trend on Thursday following positive movement overnight in response to upbeat US data. The easing of US recession fears boosted investor confidence and limited gains for the metal. Geopolitical risks and expectations of the Fed beginning a rate-cutting cycle provided some support for Gold.
The Gold price showed a modest intraday increase after dipping near the $2,432 area on Thursday, rising over 1.5% intraday amid escalating conflict in the Middle East. However, the price halted its upward movement near the $2,470 level after the release of positive US economic data. The data eased concerns about a US recession and reduced hopes for aggressive policy easing by the Federal Reserve, leading to an increase in US Treasury bond yields and strengthening of the US Dollar. A shift in US equity markets towards a risk-on sentiment also influenced Gold price movement.
Despite some gains, Gold price remained steady above the $2,450 level during Friday’s Asian session. Investors continued to anticipate the Fed’s rate-cutting cycle to begin in September, preventing significant upside for US bond yields and the USD. Additionally, the market looks towards upcoming US macro data for potential short-term opportunities during the North American session.
Persisting geopolitical tensions, particularly in the Middle East and between Russia and Ukraine, supported Gold price on Thursday. Concerns over Iran’s response to the assassination of a Hamas leader and Russia reinforcing its border defenses added to the overall market uncertainty. The release of positive US macro data, including higher-than-expected Retail Sales and initial jobless claims, shifted market expectations towards a potential 25 basis point rate cut by the Federal Reserve in September.
From a technical perspective, Gold price needs to surpass the $2,470 resistance level to signal a potential bullish trend. Failure to break through this barrier may lead to downside pressure, with key support levels at $2,447-2,445 and the $2,430-2,429 range. Further selling pressure could push Gold price below $2,400 and towards the 50-day Simple Moving Average support level at $2,383. A breakthrough of key support levels could indicate further bearish momentum.
Gold has historical significance as a store of value and medium of exchange, evolving into a safe-haven asset often used as a hedge against inflation and depreciating currencies. Central banks play a significant role in holding Gold reserves to support their currencies during times of instability and uncertainty. The inverse correlation of Gold with the US Dollar and US Treasuries, coupled with its responsiveness to geopolitical events and monetary policy, make it a versatile asset for investors seeking diversification and stability.
