GOLD Price Analysis – Sep 12, 2024
Daily Price Outlook
Gold (XAU/USD) has eased back slightly from its intraday highs but remains solidly above the crucial $2,500 mark in early European trading on Thursday.
The latest US Consumer Price Index (CPI) report, released on Wednesday, highlighted persistent underlying inflation, which has dampened expectations for a major interest rate cut by the Federal Reserve.
This has led to a modest increase in US Treasury bond yields and boosted the US Dollar, pushing it closer to its monthly peak. Consequently, the stronger dollar is putting some pressure on the gold market, which, unlike currencies, doesn’t offer any yield.
In addition to this, the positive sentiment in the equity markets is also weighing on gold, as investors shift away from safe-haven assets.
has further limited gold's gains. However, the downside for XAU/USD seems to be somewhat protected.
There’s increasing confidence that the Federal Reserve might start cutting rates in September, with expectations of a 25 basis point reduction at each of the remaining meetings this year.
This anticipation, combined with gold’s recent stable range, suggests that traders should be cautious about predicting its short-term direction. All eyes are now on the upcoming US Producer Price Index (PPI) report for new insights.
Impact of US CPI Report on Gold Prices and Market Expectations
On the US front, the broad-based US Dollar strengthened after the latest Consumer Price Index (CPI) report led investors to lower expectations of a larger 50-basis-point interest rate cut by the Federal Reserve next week.
The CME Group's FedWatch tool now shows an 87% chance of a smaller 25 bps rate cut at the next Fed meeting on September 17-18, compared to 71% before the CPI data.
Therefore, the reduced likelihood of a more aggressive policy easing has pushed up US Treasury bond yields and the US Dollar, which could weigh on gold prices since gold does not offer yields.
Traders are now awaiting the release of the US Producer Price Index (PPI) for further direction. However, any market reaction may be limited as the Fed is expected to start cutting rates soon.
The US Bureau of Labor Statistics reported that the headline CPI rose by 0.2% in August, with the yearly rate slowing more than expected from 2.9% to 2.5%, the smallest increase since February 2021.
Meanwhile, core CPI, which excludes food and energy prices, increased by 0.3% in August and by 3.2% over the past year, aligning with July's numbers and market forecasts.
This news is likely to pressure gold prices, as the stronger US Dollar and rising Treasury yields reduce gold's appeal as a non-yielding asset. However, expectations of future Federal Reserve rate cuts may help limit gold's downside.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is showing signs of modest recovery, trading at $2,517.66, up 0.25% during the 4-hour session.
The precious metal has been hovering above key support levels, benefiting from a weaker U.S. Dollar amid expectations of further dovish policy signals from the Federal Reserve.
Traders are eyeing the $2,529 pivot point, a critical resistance level that could signal further upside momentum if breached.
Immediate resistance sits at $2,529.29, which coincides with the 50-period Exponential Moving Average (EMA), currently at $2,508.80.
A break above this level could target the next resistance zones at $2,540.41 and $2,550.45. If the price manages to hold above these levels, a more bullish trend may develop, possibly pushing Gold toward the $2,560 mark in the near term.
On the downside, immediate support is located at $2,507.77, and failure to maintain this level could trigger a deeper pullback toward $2,498.09. The next key support rests at $2,485.65, where traders might anticipate stronger buying interest.
The Relative Strength Index (RSI), currently at 56, suggests that the market is in neutral territory, with neither overbought nor oversold conditions, leaving room for further movement in either direction.
For now, the overall technical outlook for Gold remains cautiously bullish, but traders should closely monitor price action around the $2,529 level. Should the precious metal fail to break above this key resistance, bearish momentum may build, prompting a retreat toward the $2,500 region.
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