Gold prices have been on a downward trend, dropping by 0.14% to trade at $2,397, largely influenced by higher US Treasury yields. This decline comes amidst news of US President Joe Biden exiting the Presidential race and endorsing Vice President Kamala Harris, creating political uncertainty and undermining Gold. The US Dollar Index remains steady at 104.34, while Wall Street opens positively following Biden’s announcement. Analysts believe that Biden’s exit could lead to favorable conditions for Gold in the long term due to his tax cuts proposals and less regulation, in contrast to Harris whose foreign policy stance is yet to be defined.
As traders keep a close watch on market developments, they are particularly interested in the release of crucial economic data such as Durable Goods Orders, the preliminary Q2 GDP number, and the Core PCE for June. Expectations are for Durable Goods Orders to increase from 0.1% to 0.4% MoM, the Q2 GDP to edge higher from Q1 by 1.4% to 1.9% QoQ, and the Core PCE to dip from 2.6% to 2.5% YoY. The recent Consumer Price Index (CPI) data indicated a disinflation process in the US, potentially leading the Fed to cut interest rates starting in September. Futures contracts also suggest a 48 basis points easing in policy by the end of the year.
In terms of technical analysis, Gold remains defensive yet shows signs of bottoming out. Despite recent losses, the Relative Strength Index (RSI) indicates bullish momentum, with potential for buyers to take control if spot prices stay above $2,400. Resistance levels are seen at $2,450 and the all-time high of $2,483, while support lies at the 50-day SMA at $2,359 and the 100-day SMA at $2,315. This analysis suggests a possible rebound in Gold prices in the near future.
One of the key economic indicators influencing market sentiment is the Gross Domestic Product (GDP) Annualized report. Released quarterly by the US Bureau of Economic Analysis, GDP measures the value of goods and services produced in the country during a specific period. Changes in GDP are closely monitored as they reflect the overall economic health of the nation. A high GDP reading is seen as bullish for the US Dollar, while a low reading is considered bearish. The data is expressed at an annualized rate to provide a clearer picture of economic growth over time.
In conclusion, the recent developments in the political arena, coupled with economic data releases and technical analysis, suggest a mixed outlook for the Gold market. While uncertainty may persist in the short term due to political factors, the overall trend remains positive for Gold prices. Traders should continue to monitor key indicators and market conditions to make informed decisions regarding their investments.
