GOLD Price Analysis – Aug 19, 2024
Daily Price Outlook
Gold prices (XAU/USD) began the week on a bearish note, moving away from Friday's record high, and trading defensively around the $2,500 level.
The retreat in gold's value comes despite dovish Federal Reserve (Fed) expectations and escalating geopolitical tensions in the Middle East, which continue to support the metal's appeal as a safe-haven asset.
The market's focus is now on upcoming Fed developments, with investors eyeing the release of the FOMC minutes and Fed Chair Jerome Powell's speech at the Jackson Hole Symposium for further cues on the rate-cut path.
Impact of Fed Rate Cut Expectations and Geopolitical Tensions on Gold Prices
On the US front, the broad-based US dollar remains under pressure, touching its lowest level since January, as markets fully price in a 25 basis point (bps) rate cut at the Fed’s September meeting.
This expectation has led to a decline in US Treasury bond yields, further weighing on the dollar.
Despite last week's upbeat US Retail Sales data and an improved US Consumer Sentiment Index, the Fed’s anticipated policy easing has overshadowed these positive indicators, supporting gold prices.
On the other side, geopolitical risks are also playing a crucial role in limiting gold's losses.
The ongoing Russia-Ukraine war and rising tensions in the Middle East, particularly following Hamas’s rejection of a ceasefire deal and Russia’s vow to retaliate against Ukraine’s recent cross-border attack, have fueled demand for the safe-haven asset.
Thus, while strong US economic data has exerted pressure on gold, the combination of a bearish US dollar, Fed rate cut expectations, and geopolitical uncertainties may continue to provide a supportive backdrop for gold prices in the near term.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,500.205, reflecting a slight decline of 0.22%. The metal has been trading just above its pivot point at $2,480.00, which is a critical level to watch.
The RSI is sitting at 66, indicating that gold is approaching overbought territory, which may signal a potential for a short-term pullback.
The 50-day Exponential Moving Average (EMA) at $2,445.98 is providing strong support and maintaining the overall bullish sentiment.
Immediate resistance is found at $2,524.11, followed by $2,540.75 and $2,556.71. On the downside, the first level of support is at $2,491.41, with stronger support at $2,480.08 and $2,461.80.
If gold breaks below $2,480, it could trigger further selling pressure.
Given the current setup, a sell entry below $2,510 with a target of $2,480 could be a strategic move.
A stop loss at $2,525 would help manage risk if the price reverses and breaks above resistance.
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