GOLD Price Analysis – Aug 13, 2024
Daily Price Outlook
Gold prices (XAU/USD) struggled to stop the early-day's downward momentum, remaining under pressure around the $2,460.07 level and reaching an intra-day low of $2,458.56.
This decline can be attributed to risk-on sentiment, which tends to reduce demand for safe-haven assets like gold.
However, rising geopolitical tensions in the Middle East and fears of a broader conflict in the region could help limit further losses for gold.
Moreover, heightened expectations that the Federal Reserve (Fed) might begin aggressively cutting interest rates in September have weakened the US dollar, potentially supporting gold prices in curbing further declines.
US Dollar Weakness and Fed Expectations Impact Gold Prices
On the US front, the broad-based US dollar is losing traction as dovish expectations for the Federal Reserve (Fed) weaken the currency, which is helping to cushion gold’s losses.
Markets are anticipating a significant 50 basis point interest rate cut by the Fed in September, providing further support to the yellow metal.
Meanwhile, upcoming US inflation data, including the Producer Price Index (PPI) on Tuesday and the Consumer Price Index (CPI) on Wednesday, are expected to show cooling inflation in July, potentially giving the Fed more room to ease policy.
Market forecasts suggest a 0.2% increase in both headline and core CPI, following June's 0.1% decline in headline inflation.
However, if the CPI readings exceed expectations, it could dampen hopes for aggressive Fed rate cuts, potentially putting downward pressure on gold prices.
Rising Middle East Tensions and Global Uncertainty Drive Gold Demand
On the geopolitical front, rising tensions in the Middle East are driving demand for safe-haven assets like gold.
Israel has intensified operations near Khan Younis in southern Gaza, sparking fears of a broader regional conflict, especially as Israel prepares for possible retaliation from Iran and Hezbollah following the assassination of Hamas leader Ismail Haniyeh in Tehran.
Meanwhile, Russian President Vladimir Putin has warned Ukraine of a strong response to its recent incursion into the Kursk region.
These developments are creating uncertainty and supporting gold prices. In Gaza, an overnight Israeli strike killed at least 10 people, and the conflict has resulted in nearly 40,000 deaths and over 92,000 injuries in Gaza, with more than 1,100 killed in Israel during the October 7 Hamas-led attacks.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,462.635, down 0.32% on the 4-hour chart. The precious metal seems to be facing a period of consolidation as it hovers just above key support levels.
The pivot point at $2,473.57 is crucial today; if prices remain below this level, we could see further downside momentum.
Immediate resistance is found at $2,496.82, followed by stronger barriers at $2,515.33 and $2,535.14.
On the flip side, immediate support lies at $2,439.98, with subsequent support levels at $2,417.59 and $2,392.62.
The 50-day Exponential Moving Average (EMA) is positioned at $2,425.35, providing a solid floor for now.
The RSI is currently at 65, indicating that while the market isn't overbought, there is limited room for a further upward push before selling pressure increases.
Given the current setup, a sell limit at $2,473 with a target of $2,440 and a stop loss at $2,497 seems prudent.
Related News
USD/CAD Price Analysis – Aug 13, 2024
JOIN LONGHORNFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.