GOLD Price Analysis – July 18, 2024

Daily Price Outlook

Gold price (XAU/USD) extended its upward rally and remained well-bid around the 2,466 level, hitting an intraday high of 2,474. However, the reason for this upward rally can be attributed to the growing optimism that the Federal Reserve (Fed) will reduce rates in September.

Markets now indicate a 93.5% probability of a 25-basis point rate cut at the September Fed meeting, up from 69.7% a week earlier. This makes non-yielding assets like gold more attractive to investors.

On the other hand, the US dollar gained bullish traction after falling to its lowest level since March during the previous session. Economic data due later in the session is likely to show an increase in weekly initial jobless claims.

At the same time, the Philadelphia Fed manufacturing index is set to indicate a slight improvement in conditions. Hence, the bullish US dollar could cap gains in the gold price.

Mixed Impact on Gold Prices Amid Fed Rate Cut Speculations and Stronger US Dollar

On the US front, the Federal Reserve is optimistic about inflation meeting its targets, hinting at potential interest rate cuts. Fed Governor Christopher Waller and Richmond Fed President Thomas Barkin see easing inflation, leading markets to predict a 93.5% chance of a 25-basis point rate cut in September, up from 69.7% before.

However, the US Dollar has strengthened due to improved Treasury yields, limiting gold prices' rise. Fed member Dr. Adriana Kugler stressed the need for more data to support rate cuts, while Chair Jerome Powell hinted that future rate cuts could be delayed despite nearing inflation targets.

On the data front, US Retail Sales for June were stable at $704.3 billion, matching market expectations, following a revised 0.3% increase in May. Later, reports are expected to show a rise in weekly jobless claims and a slight improvement in the Philadelphia Fed manufacturing index.

Therefore, the potential Fed rate cuts and stable retail sales support gold prices, but the stronger US Dollar and improved Treasury yields limit gains, resulting in a mixed impact on gold prices.

GOLD (XAU/USD) - Technical Analysis

Gold (XAU/USD) is trading at $2472.710, up 0.27%, as it continues to attract investors amid global economic uncertainties. The 4-hour chart shows gold hovering near key levels, with a pivot point set at $2490.00.

Immediate resistance is found at $2485.91, with subsequent resistance levels at $2510.78 and $2529.15. On the downside, immediate support is at $2430.33, followed by $2406.52 and $2381.37.

The Relative Strength Index (RSI) stands at 70, indicating overbought conditions that may prompt a short-term pullback. However, the 50-day Exponential Moving Average (EMA) at $2408.46 suggests a bullish trend, with prices consistently trading above this level.

Given the current technical setup, traders might consider entering long positions above $2455, targeting a take profit level of $2490. A stop loss should be placed at $2440 to manage risk. This strategy capitalizes on the prevailing bullish momentum while guarding against potential downside risks.

Related News

USD/JPY Price Analysis – July 18, 2024

AUD/USD Price Analysis – July 18, 2024

GOLD Price Analysis – July 17, 2024