GOLD Price Analysis – July 24, 2024

Daily Price Outlook

Gold prices (XAU/USD) continued their upward momentum, trading around $2,411.12 and reaching an intraday peak of $2,419.15. This rally is largely attributed to dovish expectations from the Federal Reserve, which have weakened the US dollar and boosted gold's appeal.

Meanwhile, the risk-off market sentiment has increased demand for gold as a safe-haven asset.

The US dollar has weakened amid growing anticipation of potential Fed rate cuts in September and recent political developments in the US, leading to dollar selling and further supporting gold prices.

Looking ahead, traders are expected to remain cautious, refraining from making aggressive bets until clearer signals emerge about the Federal Reserve's policy direction.

Consequently, market focus will shift to the upcoming Advance US Q2 GDP data and the US Personal Consumption Expenditures (PCE) Price Index, set for release on Thursday and Friday, respectively. Moreover, traders will keep an eye on the flash global PMIs for short-term market insights.

US Dollar Weakness and Economic Data Boost Gold Prices Amid Fed Rate-Cut Expectations

On the US front, the broad-based US dollar struggled to maintain its recent upward trend and lost its bullish traction, providing support for gold prices.

This decline was driven by growing expectations that the Federal Reserve may begin a rate-cutting cycle in September, along with recent US political developments. These factors have led to increased selling pressure on the US dollar, allowing gold to remain bullish.

On the data front, the Federal Reserve Bank of Richmond reported a deterioration in manufacturing activity for July, with the composite manufacturing index falling to -17 from -10 in June.

Additionally, the National Association of Realtors indicated a 5.4% decline in US existing home sales in June, reaching a seasonally adjusted annual rate of 3.89 million units, the lowest since December and below expectations.

These signs of economic weakness, including declining manufacturing activity and falling home sales, enhance the likelihood of a rate cut, as they could prompt the Federal Reserve to ease monetary policy.

Therefore, the US dollar's retreat from a two-week high, driven by rising expectations of a Federal Reserve rate-cutting cycle in September and recent US political developments, has bolstered gold prices by increasing demand for this safe-haven asset.

Gold Prices Boosted by China's Economic Slowdown and PBoC Rate Cut

On the other hand, gold prices could gain further traction due to sluggish economic activity in China and an unexpected rate cut by the People's Bank of China (PBoC), which have introduced broader market uncertainties.

These factors have increased the safe-haven appeal of gold, as investors seek refuge in stable assets amidst economic volatility. The PBoC's move to lower rates and China's economic slowdown could lead to heightened global market concerns, further driving demand for gold as a safe-haven asset.

GOLD (XAU/USD) - Technical Analysis

Gold (XAU/USD) is currently trading at $2414.07, marking a 0.30% increase on the day. On the 4-hour chart, key technical levels indicate crucial points of potential resistance and support that traders should monitor closely. The pivot point is positioned at $2418.92, suggesting a central level around which the price may oscillate.

Immediate resistance levels are identified at $2435.02, $2453.93, and $2482.70. These levels represent potential selling points if the price attempts to move higher, where the market may encounter selling pressure.

Conversely, immediate support levels are found at $2391.97, $2370.70, and $2350.44. These levels are critical as they represent potential buying points where the price may find support, preventing further declines.

The Relative Strength Index (RSI) is currently at 49, indicating a neutral momentum in the market. This suggests that gold is neither overbought nor oversold, providing a balanced view for both buyers and sellers.

The 50-day Exponential Moving Average (EMA) stands at $2425.78, acting as a dynamic resistance level that traders should watch for potential price reactions.

Given the current market conditions, the recommendation is to sell below $2420. The take profit level is set at $2390, providing a reasonable downside target. A stop loss is advised at $2435 to manage risk, protecting against potential adverse price movements.

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