GOLD Price Analysis – July 03, 2024
Daily Price Outlook
Gold prices (XAU/USD) kicked off the day on a bullish note, showing strong momentum despite the renewed strength of the US dollar and a generally risk-on market sentiment. Gold is currently trading around $2,343 mark, hitting the intraday high of $2,347 level.
However, the upward trend was mainly fueled by mounting expectations of upcoming rate cuts by the Federal Reserve in both September and December. These expectations were bolstered by Federal Reserve Chair Jerome Powell's recent dovish remarks.
Conversely, worries about a potential global economic slowdown, compounded by ongoing geopolitical tensions and political uncertainties in the US and Europe, are weighing on gold prices.
These factors are introducing significant volatility into the market, impacting investor sentiment and molding the trajectory of the precious metal's price fluctuations. Investors are closely monitoring developments in economic indicators and central bank policies for further clues on the future direction of gold prices amidst this complex landscape.
However, the rise in gold prices might be slowing down as traders are cautious about making bold moves. They are waiting for clearer signals about the Federal Reserve's future plans.
Therefore, the market will pay close attention to the release of the FOMC meeting minutes later today. In the meantime, traders will watch important US economic reports like the ADP employment report and the ISM Services PMI for more insights.
Impact of US Economic Data and Fed Outlook on Gold Prices
On the US front, the strength of the US dollar has increased, supported by strong labor market data that surpassed forecasts. This has lessened investor expectations for a Federal Reserve rate cut in September.
The robust economic data suggests resilience in the economy, easing immediate pressure for monetary policy easing. However, despite this positive news, markets are still anticipating higher chances of a rate cut in September and the possibility of another cut in December.
Meanwhile, investors are cautious as they wait for clarity on the Federal Reserve's position on interest rates. Fed Chair Jerome Powell has indicated satisfaction with inflation progress but stressed the need to be confident that inflation will consistently move toward the 2% target before considering any rate cuts.
On the data front, JOLT job openings unexpectedly increased from 7.919 million in April to 8.140 million in May, surpassing economists' expectations of 7.910 million.
This uptick indicates a strengthening US labor market, which has the potential to bolster wages and disposable income. Increased disposable income could stimulate consumer spending, potentially contributing to demand-led inflation pressures.
Therefore, the bullish US dollar and reduced rate cut expectations may limit gold's rise. Meanwhile, the positive economic data and Fed caution could stabilize prices, but rising job openings could boost consumer spending and inflation fears, supporting gold.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently exhibiting bullish momentum, trading at $23450.460, up 0.73% on the day. This rise is supported by a favorable technical setup and positive market sentiment, as investors digest the latest economic data and central bank commentary.
The key price levels indicate a strong bullish trend with immediate resistance at $2349.34, followed by $2356.79 and $2364.24. On the downside, immediate support is found at $2328.26, with further support levels at $2315.91 and $2310.59.
The technical indicators reinforce this positive outlook. The Relative Strength Index (RSI) is at 65, suggesting that while the market is nearing overbought territory, there is still potential for further gains before a correction might be necessary.
The 50-day Exponential Moving Average (50 EMA) at $2326.13 acts as a dynamic support level, maintaining the overall bullish structure of the market. As long as the price remains above the pivot point of $2337.41 and the 50 EMA, the upward trend is likely to continue.
The recommended strategy is to enter above $2336, set a take-profit target at $2357, and place a stop loss at $2321.
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