GOLD Price Analysis – Aug 14, 2024
Daily Price Outlook
Gold prices (XAU/USD) managed to halt their downward trend and regained bullish momentum, reaching an intraday high of 2,478.40 on Wednesday, after stabilizing around the 2,475.31 level.
The gains were primarily driven by renewed selling pressure on the US dollar, which weakened amid soft U.S. producer inflation data, heightening expectations for more significant interest rate cuts. Moreover, the escalating geopolitical tensions in the Middle East and concerns over a potential regional conflict provided further support to the gold price.
Cooling Inflation and Rate Cut Expectations Boost Gold Prices Amid Weaker US Dollar
On the US front, the Bureau of Labor Statistics (BLS) will release the July Consumer Price Index (CPI) inflation data on Wednesday at 12:30 GMT, which is expected to cause significant volatility in the US Dollar (USD). This report could shape market expectations for potential Federal Reserve interest rate cuts in September.
As inflation appears to be cooling, there is growing anticipation of deeper rate cuts, which could benefit gold prices, especially as the USD weakens and US Treasury bond yields decline. Atlanta Fed President Raphael Bostic even mentioned he might support a rate cut by the end of the year if the data continues to confirm this trend.
Recent data shows that the US Producer Price Index (PPI) rose by 2.2% in July, down from 2.7% in June, signaling cooling inflation. The CPI for July is expected to show a 2.9% annual rise, slightly lower than June’s 3%, with core CPI projected to decrease slightly.
This cooling inflation, along with a weaker-than-expected jobs report, has increased speculation about multiple rate cuts by the Fed, with market expectations split on whether a 50-basis point cut will occur in September.
This news supports gold's bullish momentum, as expectations of deeper Federal Reserve rate cuts amid cooling inflation weaken the US Dollar and lower Treasury yields. This environment boosts demand for gold as a safe-haven asset, driving prices higher.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,469.29, down 0.23% for the day, as it hovers near a critical juncture.
The price is sitting just below the pivot point at $2,488.00, which serves as a significant level to watch.
The daily chart shows that gold has been in a consolidation phase, bouncing between key support and resistance levels.
The immediate support is at $2,444.65, followed by stronger support at $2,421.89 and $2,394.40.
If gold continues its descent and breaches these levels, we could see a more pronounced bearish trend emerge.
On the flip side, the immediate resistance is at $2,496.82, with further resistance at $2,515.33 and $2,535.14.
A break above the pivot point could signal a bullish move, potentially driving the price toward these higher levels.
The RSI is currently at 65, indicating that gold is nearing overbought conditions but still has room to move higher if bullish momentum picks up.
The 50-day Exponential Moving Average (EMA) at $2,427.92 is providing underlying support, aligning with the broader uptrend seen over the past few weeks.
Given the current setup, a potential buy entry above $2,455 could be a strategic move, with a take profit target at the pivot point of $2,488.00.
A stop-loss placed at $2,437 would help manage risk in case the bearish scenario plays out. The key is to watch how gold reacts around the pivot point; a clear move above it could open the door for further gains, while failure to break it may lead to a deeper correction.
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