Gold price continues to attract follow-through buyers for the second day in a row, supported by expectations of further rate cuts by the Federal Reserve. The weakening US Dollar and a softer risk tone are also contributing to the positive momentum for the precious metal. However, diminishing odds for aggressive Fed easing and stronger-than-expected US inflation data may limit gains ahead of the US PPI release.
The US Labor Department’s report on Consumer Price Index and unemployment benefits indicate signs of weakness in the labor market, prompting speculations of a slower pace of rate cuts by the Fed. This mixed data suggests that the central bank will continue cutting interest rates, benefiting the non-yielding Gold price. Additionally, the benchmark 10-year US government bond yield remains above 4%, supporting the Greenback and potentially capping further gains for Gold.
China’s announcement of fiscal stimulus measures and the upcoming US Producer Price Index report are key factors to watch for short-term opportunities in the Gold market. From a technical perspective, the Gold price is likely to face resistance near the $2,670-2,672 zone, with a bullish bias remaining intact. Oscillators on the daily chart suggest that the path of least resistance for Gold is to the upside, with a possible move towards the all-time high around the $2,685-2,686 region.
However, a break below the immediate support at $2,630-2,628 could lead to a challenge of the pivotal $2,600 support level, triggering further corrective declines. The XAU/USD might then target the $2,560 zone before dropping to the $2,500 psychological mark. Traders should exercise caution and await further developments in the market before placing aggressive bets on Gold. Overall, the current market conditions indicate a mix of factors influencing the Gold price, with potential for both upside and downside movements based on upcoming economic data releases.
