GOLD Price Analysis – July 22, 2024

Daily Price Outlook

Gold (XAU/USD) started the new week on a bullish note, halting its three-day downtrend. It gained positive momentum, climbing above the $2,400 level, with an intraday high of $2,412.

This rebound was primarily driven by a weaker US dollar, influenced by recent US political developments and rising expectations of a Federal Reserve rate-cut cycle starting in September.

Moreover, the ongoing concerns about slowing Chinese economic growth, persistent geopolitical risks from the prolonged Russia-Ukraine conflict, and long-lasting Middle East tensions have enhanced gold's appeal as a safe-haven asset.

Looking ahead, investors are keenly awaiting additional signals about the Federal Reserve's future actions, which will likely impact gold prices.

This week’s flash PMI report and the US Personal Consumption Expenditures (PCE) Price Index data, scheduled for release on Friday, are expected to offer further understanding regarding global economy and create short-term trading opportunities for gold.

US Dollar Weakens Amid Political Developments and Fed Rate Cut Expectations, Boosting Gold Prices

On the US front, the broad-based US dollar lost momentum and turned bearish after President Joe Biden announced he’s leaving the presidential race. Investors who expected Trump to win started changing their bets.

Now, Vice President Kamala Harris is seen as the top Democratic candidate, but former President Donald Trump is still the favorite in betting markets. On the other hand, market participants expect the Federal Reserve to cut interest rates in September, which has weakened the US dollar.

Therefore, the expected Federal Reserve rate cut and weakened US dollar have boosted gold's appeal as a safe-haven investment, leading to rising gold prices as investors seek stability.

Geopolitical Tensions and Weak Chinese Economic Growth Boost Gold Prices

On the economic front, China's economy grew by 4.7% year-on-year in the second quarter, missing expectations and slowing compared to earlier in the year. This weaker growth, coupled with sluggish consumer demand, is pushing up gold prices as investors seek safe havens amid global uncertainties.

The ongoing Russia-Ukraine war and Middle Eastern conflicts are also contributing to gold's appeal.

Recently, Israeli forces attacked the Nuseirat refugee camp 63 times in a week, resulting in 91 Palestinian deaths and 251 injuries.

Israeli Prime Minister Netanyahu is sending negotiators to resume talks on captives, with fighting continuing in Gaza, where the death toll stands at 38,983 and injuries at 89,727. Since the October 7 Hamas attacks, Israel has reported 1,139 deaths, with captives still held in Gaza.

Hence, the weaker economic growth in China and ongoing global conflicts, including the Russia-Ukraine war and Middle East tensions, have heightened gold's appeal as a safe-haven asset, driving up its prices.

GOLD (XAU/USD) - Technical Analysis

Gold (XAU/USD) is currently trading at $2405.36, up a modest 0.03%. On the 4-hour chart, the pivot point is positioned at $2412.14, indicating a critical juncture for traders. Immediate resistance is seen at $2435.02, with further resistance levels at $2453.93 and $2482.70.

On the downside, immediate support is identified at $2393.69, followed by stronger support at $2370.70 and $2350.44.

Technical indicators suggest a mixed outlook. The Relative Strength Index (RSI) is currently at 36, indicating that gold is approaching oversold territory but is not there yet.

This could imply potential buying interest if the RSI continues to drop. The 50-day Exponential Moving Average (EMA) stands at $2421.99, which is above the current price, suggesting a bearish trend in the short term.

Given the technical setup, a sell entry is recommended below the pivot point at $2412. The suggested take profit level is $2381, aligning with support levels that could act as potential targets for a downward move.

A stop loss should be placed at $2435 to protect against upside risks, which coincides with the immediate resistance level.

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