GOLD Price Analysis – July 29, 2024
Daily Price Outlook
Gold (XAU/USD) maintained its upward trend, holding firm around the $2,392.36 level and reaching an intraday high of $2,403.25. This rally was largely driven by concerns over escalating conflict in the Middle East, bolstering safe-haven assets such as gold.
Meanwhile, the bearish US dollar, pressured by expectations of a September Fed rate cut, was another key factor boosting gold prices.
Looking ahead, traders are likely to remain cautious as they await the results of the two-day Federal Open Market Committee (FOMC) meeting, concluding on Wednesday.
This meeting, coupled with key US macroeconomic data, including the Nonfarm Payrolls (NFP) report at the start of the month, could provide new direction for the commodity.
Modest Inflation Data Boosts Gold Prices Amid Weaker US Dollar and Lower Treasury Yields
On the US front, the broad-based US dollar continued to lose strength and remained depressed after the US Personal Consumption Expenditures (PCE) Price Index data released on Friday showed modest inflation growth in June.
This data increased expectations for the Federal Reserve to start cutting interest rates soon, leading to a decline in US Treasury bond yields and putting pressure on the US dollar.
On the data front, the US Commerce Department reported that the Personal Consumption Expenditures (PCE) Price Index rose by 0.1% in June, following no change in May. Over the past year, the PCE Price Index increased by 2.5%, down slightly from 2.6% in May, indicating easing price pressures.
Meanwhile, the core PCE Price Index, which excludes food and energy prices and is the Fed's preferred inflation measure, rose by 0.2% in June and held steady at 2.6% year-over-year. These figures matched consensus estimates and signaled a gradual reduction in inflation.
Therefore, the modest inflation growth indicated by the PCE Price Index data increased expectations for Federal Reserve rate cuts, weakening the US dollar and US Treasury bond yields, thus boosting gold prices as a safe-haven asset.
Geopolitical Tensions Boost Gold Prices Amidst Limited Upside from Global Equity Markets
Another factor boosting the gold price is the rising geopolitical tensions in the Middle East. The recent attack in the Golan Heights and ongoing conflict between Israeli forces and Hezbollah in Lebanon have increased demand for gold as a safe-haven asset. Additionally, the situation in Gaza, with large-scale evacuations and heavy fighting, is adding to gold’s appeal.
Despite this, the positive sentiment in global equity markets is limiting gold’s price gains, as investors are less focused on traditional safe-haven assets. Therefore, while gold is benefiting from geopolitical fears, its price is somewhat restrained.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,388.515, up 0.34% on a 4-hour chart. The pivot point stands at $2,400.94, which is a crucial level to monitor. Immediate resistance levels are $2,432.20, $2,451.44, and $2,475.48. On the downside, immediate support is at $2,370.88, followed by $2,353.65 and $2,337.62.
The Relative Strength Index (RSI) is at 47, indicating a neutral stance with no clear overbought or oversold signals. This suggests that the market could move in either direction depending on forthcoming market dynamics and data releases.
The 50-day Exponential Moving Average (EMA) is currently at $2,411.16, which provides a higher resistance level. If prices move above this EMA, it could signify a stronger bullish trend. Conversely, staying below this EMA reinforces a bearish outlook.
Given the current technical setup, traders should consider a cautious approach. Buying opportunities may present themselves above the pivot point of $2,400.94, with a potential take profit level at $2,432.20.
A stop loss should be set at $2,370.88 to manage downside risk. The RSI suggests neutrality, so traders should keep an eye on any significant movements that might indicate a clearer trend direction.
In summary, while gold is showing some bullish momentum, key resistance levels above and support levels below will be critical in determining the next significant price movements.
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