GOLD Price Analysis – July 26, 2024

Daily Price Outlook

Gold (XAU/USD) reversed its previous downward trend and gained momentum, climbing from 2,370.15 to an intraday high of 2,379.35. This uptick was largely driven by a weaker US dollar, fueled by expectations that the Federal Reserve might begin a rate-cut cycle in September.

The US Dollar (USD) fell short of a two-week high reached earlier in the week, which bolstered gold's attractiveness to investors. However, stronger-than-expected US GDP growth and slower inflation in Q2 2024 suggest a resilient economy, potentially diminishing gold's appeal as a safe-haven asset and limiting the extent of its gains.

Looking ahead, traders are closely monitoring the upcoming release of the US Personal Consumption Expenditures (PCE) Price Index this Friday for clues on the Federal Reserve's policy stance.

The PCE report is expected to impact USD demand and could potentially create new momentum for gold, which, as a non-yielding asset, often reacts to shifts in interest rate expectations and economic indicators.

US Economic Data and Federal Reserve Expectations Impact Gold

On the US front, the US dollar struggled to gain momentum and turned bearish amid expectations of an impending rate-cut cycle by the Federal Reserve. Markets have fully priced in a rate cut for September and anticipate two more reductions by the end of the year, which has kept the US Dollar on the back foot and supported gold prices.

Meanwhile, the strong US economic data, including 2.8% GDP growth and a decline in unemployment claims, help limit the US dollar's losses, though lower inflation still challenge its strength.

On the data front, the US economy expanded at a 2.8% annualized rate from April to June, up from 1.4% in the previous quarter and surpassing the anticipated 2% growth. The core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred measure of inflation, moderated to 2.9% from 3.7% in the previous quarter.

Additionally, the US Department of Labor reported a larger-than-expected decline in unemployment insurance claims, which fell to 235,000 for the week ending July 20.

This data could weigh on gold prices, as stronger economic growth and lower inflation decrease gold's appeal as a safe-haven asset. Additionally, the drop in unemployment claims suggests a strong job market, which could heighten expectations for higher interest rates and further reduce gold's attractiveness.

GOLD (XAU/USD) - Technical Analysis

Gold (XAU/USD) is currently trading at $2369.020, up by 0.30%. The 4-hour chart reveals key technical levels and indicators suggesting the metal's future trajectory. The pivot point is positioned at $2379.70, acting as a critical marker for potential market movements.

On the upside, immediate resistance is noted at $2401.34, with further resistance levels at $2421.78 and $2451.44. These levels will be crucial for any bullish momentum. Conversely, immediate support is seen at $2357.25, followed by $2339.62 and $2319.18, which are pivotal for any downside movements.

The Relative Strength Index (RSI) stands at 33, indicating that gold is nearing oversold territory. This could imply a potential rebound or a consolidation phase before any significant move.

The 50-day Exponential Moving Average (EMA) is positioned at $2418.25, suggesting that the current price is below this average, reinforcing the bearish sentiment. This indicator often serves as a benchmark for medium-term trends and could act as resistance if the price attempts to rise.

In conclusion, the technical outlook for gold remains bearish below the $2379.70 pivot point. Traders are advised to consider entry points for selling below $2380, with a take profit target of $2350 and a stop loss at $2395.

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