GOLD Price Analysis – Aug 09, 2024
Daily Price Outlook
Gold prices (XAU/USD) initially struggled to maintain their upward momentum but regained positive traction, climbing to around $2,426 and reaching an intra-day high of $2,428.
The mild bullish movement was driven by growing expectations that the Federal Reserve could begin reducing interest rates as early as September, which weakened the US dollar and supported gold gains.
However, the stronger-than-expected US labor market report released on Thursday eased recession fears and bolstered investor confidence, diminishing demand for safe-haven assets like gold.
Additionally, concerns over escalating geopolitical tensions in the Middle East provided further support, helping gold limit its losses.
Impact of US Economic Data and Fed Expectations on Gold Prices
On the US front, the broad-based US dollar has been declining as markets have fully priced in a 25-basis point rate cut by the Federal Reserve in September, with speculation of a possible 50-basis point cut.
This expectation has provided some support for gold prices. However, a strong labor market report released on Thursday eased fears of an imminent recession and boosted investor confidence, reducing gold's appeal as a safe-haven asset.
This shift in sentiment led to a rally in US equity markets, which further limited gold's gains.
Meanwhile, the anticipation of a dovish Fed stance has pushed US Treasury bond yields lower and dragged the US dollar away from its weekly high, providing additional support for XAU/USD.
On the data front, the US report released on Thursday revealed that initial jobless claims for the week ending August 3 came in at 233,000, beating expectations of 240,000 and down from the previous week's 249,000.
This stronger-than-expected data alleviated concerns about a potential economic downturn in the US, leading to a rise in US Treasury bond yields and applying downward pressure on the US Dollar.
Therefore, the strong US labor market data and rising Treasury yields limited gold's appeal, but expectations of a dovish Fed and a weaker US Dollar provided some support for prices.
Rising Geopolitical Tensions and Its Impact on Gold Prices
On the geopolitical front, Israeli forces have launched a new offensive on Khan Younis in southern Gaza, targeting about 30 sites and issuing new evacuation orders to residents who have already been displaced multiple times.
Leaders from Qatar, Egypt, and the United States have invited Israel and Hamas to resume ceasefire talks on August 15 amid rising regional tensions and fears of retaliatory strikes.
Israel has accepted the invitation to meet in Cairo or Doha, but Hamas has not yet responded. Recent attacks by Israel on two schools in Gaza City have killed at least 15 people and injured 30.
As per the latest report, the conflict has resulted in approximately 39,699 deaths and 91,722 injuries in Gaza.
The ongoing conflict and geopolitical tensions typically drive gold prices higher as investors seek safe-haven assets. Increased uncertainty and violence often boost demand for gold.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,422.70, down 0.24% on the day. The 4-hour chart indicates a mixed technical landscape, with the price holding above the pivot point at $2,412.90 but showing signs of hesitancy near the immediate resistance level at $2,431.41.
The Relative Strength Index (RSI) at 55 suggests the market is in neutral territory, neither overbought nor oversold, indicating potential for both upward and downward movement.
The 50-day Exponential Moving Average (EMA) at $2,417.15 acts as a critical support level, reinforcing the bullish sentiment if the price remains above it.
However, should gold fail to breach the immediate resistance, it may retrace toward the first support level at $2,380.82.
Further downside could see the price testing the next support levels at $2,354.48 and $2,335.02, which are key areas to watch for potential buying interest.
On the upside, a break above $2,431.41 could trigger bullish momentum, pushing the price toward the next resistance levels at $2,452.64 and $2,477.89. These levels are crucial for gold bulls aiming for a sustained rally.
Given the current market dynamics, entering a buy position near the pivot point at $2,413, with a take profit target at $2,447 and a stop loss at $2,398, could offer a balanced risk-reward ratio.
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