Gold price has experienced a slight downturn as the US Dollar strengthens due to decreased expectations of a 50 basis points rate cut by the Federal Reserve. Despite this, the downside is limited as traders eagerly await the release of US inflation numbers for a potential rebound. The technical setup suggests the possibility of a breakout through a short-term trading range.
Following the release of a mixed US monthly jobs report on Friday, investors have reduced their bets for a larger interest rate cut by the Fed in September, leading to increased strength in the USD Index. This, in turn, acts as a headwind for Gold price, which struggles to capitalize on the upward movement from the $2,485 region. Additionally, the positive tone in equity markets is undermining the safe-haven appeal of Gold, with XAU/USD remaining within a multi-week trading range as investors seek clarity on the size of the Fed rate cut later this month.
Furthermore, the market focus is expected to shift to the release of the latest US consumer inflation figures on Wednesday as traders hold back from aggressive bearish bets on the metal amid prospects of an imminent start of the Fed’s rate-cutting cycle. The positive momentum in the USD, along with the overall tone in equity markets, continues to weigh on Gold price, which remains range-bound as investors await more clarity on the Fed’s upcoming actions.
In terms of technical analysis, Gold price has been consolidating around the $2,500 psychological mark, forming a rectangle pattern on the daily chart. Despite the recent rally to an all-time peak, oscillators on the daily chart indicate a positive near-term outlook for Gold price. It is advisable to wait for a sustained breakout through the trading range resistance before considering further appreciation. On the downside, support levels can be found near the $2,485 region and the $2,470 horizontal zone.
Gold has a rich history and is widely considered a safe-haven asset, especially during turbulent times. Central banks are the largest holders of Gold reserves, using them to support their currencies during economic uncertainties. Gold has an inverse correlation with the US Dollar and US Treasuries, making it a popular investment choice during times of market volatility. The price of Gold can be influenced by various factors, including geopolitical instability, fears of recession, interest rates, and currency movements.
In conclusion, the Gold price movement is closely tied to market dynamics, global economic conditions, and central bank actions. While the current outlook remains uncertain due to potential Fed rate cuts and US inflation data, Gold continues to be a preferred asset for investors seeking stability and protection against economic risks. Traders should closely monitor key indicators and technical levels to gauge the future direction of Gold price in the coming weeks.
