The Gold price rebounds on Tuesday in Asian trading hours as the US Dollar weakens. Traders are anticipating a potential interest rate cut by the US Federal Reserve in September after soft US employment data last week. The Gold price may also benefit from political uncertainties in France and geopolitical tensions in the Middle East. However, the decision by China’s PBoC to pause Gold purchases for the second consecutive month in June could weigh on XAU/USD in the near term. Investors will closely monitor Fed Chair Jerome Powell’s testimony and US CPI inflation data later in the week.
China, the world’s largest gold consumer, kept its Gold holdings unchanged for the second month in June, signaling a pause in its 18-month buying streak. This decision may be attributed to profit-taking and strong equities markets. Financial markets are currently pricing in a 76% chance of a Fed rate cut in September, up from 71% last week. US CPI inflation is expected to ease slightly in June. The non-purchase of Gold by China and the potential Fed rate cut can impact the Gold price in the near term.
Technical analysis shows a bullish bias for the Gold price in the longer term. The precious metal has broken out of a descending trend channel and is trading above the key 100-day EMA. The RSI is in the bullish zone, indicating potential support for XAU/USD. Immediate resistance levels to watch are at $2,400 and $2,432, with further upside barriers at $2,450. On the downside, support levels are at $2,340 and $2,273. Traders will continue to monitor these levels for potential trading opportunities.
In the past 7 days, the US Dollar showed weakness against major currencies, with the Pound Sterling being the strongest performer. The heat map below displays the percentage changes of USD against EUR, GBP, CAD, AUD, JPY, NZD, and CHF. The EUR and GBP saw gains against the USD, while the JPY and CHF experienced losses. Traders will keep an eye on the USD performance against these currencies in the coming days to gauge market sentiment.
Overall, the Gold price remains strong amid rising Fed rate cut bets and geopolitical tensions. Traders are closely watching key events such as Powell’s testimony and US CPI inflation data for further market direction. The decision by China’s PBoC to pause Gold purchases could influence Gold prices in the short term. Technical analysis suggests a bullish bias for XAU/USD, with key resistance and support levels outlined for traders. The USD’s performance against major currencies will also be a crucial factor to monitor in the near future.
