GOLD Price Analysis – Oct 01, 2024
Daily Price Outlook
Gold (XAU/USD) maintained its upward trend and found some positive momentum on Tuesday, rising to $2,644 after reaching an intraday high of $2,645, representing a 0.39% increase for the day.
However, the recent surge in geopolitical tensions in the Middle East has heightened demand for safe-haven assets, particularly gold. Furthermore, expectations of a slowdown in US inflation suggest that the Federal Reserve may continue to cut interest rates, while hopes for China's economic stimulus are also contributing to a boost in physical demand for precious metals.
These factors are collectively creating a favorable environment for gold upward trend, making it an attractive option for investors seeking stability amid uncertainty.
At the same time, the gains in the gold price could be faded as Fed Chair Jerome Powell's hawkish comments on Monday prompted investors to reassess their expectations for aggressive rate cuts.
This shift led to a strengthened demand for the US dollar, which has limited upward momentum for gold. Besides this, the positive sentiment in global financial markets cap gold's potential as investors focus on key US economic data releases this week.
Federal Reserve Outlook and Geopolitical Tensions Impacting Gold and Silver Markets
On the US front, hopes for a continued slowdown in inflation had fueled expectations that the Federal Reserve might cut interest rates further.
However, Fed Chair Jerome Powell's hawkish remarks on Monday prompted investors to rethink those expectations. He indicated that two more 25 basis point rate cuts could be on the table this year, provided the economy performs as anticipated.
This shift in sentiment has bolstered the US Dollar for the second consecutive day, following its rebound from the lowest level seen since July 2023.
Despite this, markets continue to price in the possibility of a larger Federal Reserve rate cut by the end of the year. Meanwhile, the ongoing geopolitical tensions are further bolstering demand for safe-haven assets like gold.
As investors seek clarity on the Fed’s future actions, they are turning their attention to upcoming US economic data, including the ISM Manufacturing PMI and JOLTS Job Openings.
Consequently, the uncertainty surrounding the Fed's rate cuts and ongoing geopolitical tensions are likely to keep gold in demand as a safe-haven asset. However, a stronger US Dollar may limit gold's upward potential as investors await key economic data for further guidance.
GOLD (XAU/USD) - Technical Analysis
Gold prices are trading in a narrow range, reflecting a consolidation phase as the market digests recent comments from the U.S. Federal Reserve and awaits pivotal economic data releases. The precious metal is currently hovering around $2,638.40, showing a modest uptick of 0.14%.
The recent price action has positioned gold just below its immediate resistance at $2,650.27, which coincides closely with the 50-day Exponential Moving Average (EMA) of $2,651.13.
This technical confluence suggests a robust barrier to any upside moves unless a substantial catalyst emerges.
The Relative Strength Index (RSI) reads 45.00, indicating that momentum is neutral, with a slight bearish tilt. Given the lack of strong directional momentum, gold is likely to continue oscillating between key support and resistance levels in the short term.
On the downside, immediate support is observed at $2,633.19, a level that, if breached, could accelerate declines toward $2,624.76 and potentially $2,615.24.
For traders, the pivot point at $2,643.35 is crucial. A sustained break below this level could signal further downside risk, making a short position attractive with a target of $2,630.
Conversely, a rebound above the 50-EMA resistance could pave the way for gold to test $2,660.86 and $2,671.02, offering a possible bullish reversal.
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