GOLD Price Analysis – July 15, 2024
Daily Price Outlook
Gold price (XAU/USD) managed to stop its early-day losses and drew strong fresh bids around the 1,912 level. The reason for its upward trend could be attributed to the growing speculation for Fed rate cuts in September.
However, the gains in the gold price could be short-lived or limited as the US Dollar gained ground after an assassination attempt on former United States (US) President Donald Trump improved the US Dollar’s appeal. Nevertheless, the near-term outlook for the gold price remains firm as US bond yields weaken.
US Treasury yields fall as market expectations for the Fed to begin reducing interest rates from the September meeting have accelerated significantly.
Impact of Economic Indicators on Gold Prices and Market Outlook
On the US front, the outlook for gold remains strong as US bond yields weaken. Although the 10-year US Treasury yields edged higher to 4.20%, they are still near a four-month low as the lower yields reduce the opportunity cost of holding non-yielding assets like gold.
Market expectations for the Fed to start reducing interest rates from September have surged due to easing US consumer inflation and a cooling labor market. Last week's US Consumer Price Index (CPI) report for June showed inflation slowing faster than expected, boosting confidence in the ongoing disinflation process.
Additionally, the US Bureau of Labor Statistics reported on Friday that the Producer Price Index (PPI) for final demand increased by 2.6% in June, exceeding the expected 2.3%, indicating potential inflationary pressures in the production pipeline.
Therefore, the impact of this news on gold prices is positive. As US bond yields weaken and inflation eases, the opportunity cost of holding non-yielding assets like gold decreases.
Additionally, rising expectations for Fed rate cuts enhance gold's appeal as an investment, contributing to firmer near-term prices.
Moving on, this week investors will focus on US Retail Sales data for June, expected to show no change after a 0.1% growth in May, to be published Tuesday. On Monday, attention will be on Fed Chair Jerome Powell’s speech at 16:30 GMT, where he may discuss inflation and interest rates.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2404.275, showing a slight decline of 0.01%. The 4-hour chart highlights key levels that traders should be aware of to navigate potential price movements.
The pivot point is set at $2392.41, a critical juncture that can indicate the direction of future price action.
Immediate resistance is observed at $2418.65, with further resistance levels at $2430.04 and $2441.14. These levels are essential for traders to watch, as they can signal where upward momentum might face challenges.
Conversely, on the downside, immediate support is identified at $2380.69, followed by $2370.16 and $2355.08. These support levels suggest potential areas where prices could stabilize or rebound if selling pressure increases.
Technical indicators provide further insights into the current market sentiment. The Relative Strength Index (RSI) is at 52, indicating a neutral stance without strong overbought or oversold conditions.
This neutrality suggests that the market is balanced and not skewed heavily in one direction. The 50-day Exponential Moving Average (EMA) is positioned at $2388.37, serving as a dynamic support level. The price remaining above this average could prevent further declines, signaling that buyers are stepping in at this level.
Given these observations, the outlook for Gold (XAU/USD) suggests a cautious bearish sentiment below the pivot point of $2392.41. Traders might consider an entry price to sell below $2405, aiming for a take profit at $2392.
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