GOLD Price Analysis – Sep 13, 2024
Daily Price Outlook
Gold prices (XAU/USD) climbed to a new all-time high of around $2,570 during Friday’s European trading session. However, this impressive rally followed a softer-than-expected US Producer Price Index (PPI) report from Thursday, which suggested inflation might be easing.
Investors are now anticipating a significant interest rate cut by the Federal Reserve in September, boosting gold’s appeal.
Meanwhile, US Treasury yields have remained near their 2024 lows, and the US dollar fell to a new weekly low, both factors making gold even more attractive as a safe-haven asset.
Beyond the economic factors, ongoing geopolitical tensions in the Middle East and the persistent Russia-Ukraine conflict are also pushing investors toward gold, reinforcing its status as a safe-haven asset.
Looking ahead, traders are staying on edge as they anticipate next week’s crucial central bank decisions.
The Federal Reserve’s policy announcement on Wednesday and the Bank of Japan’s meeting on Friday are key events that are adding to the current market uncertainty and caution.
Gold Prices Soar to New Highs Amid Weakening Dollar and Easing Inflation
On the US economic front, the broad-based US Dollar has weakened following Thursday’s Producer Price Index (PPI) report, which showed inflation cooling down more than expected.
This has fueled speculation that the Federal Reserve might implement a more substantial interest rate cut in September.
Notably, the CME Group’s FedWatch Tool now suggests there’s a 40% chance the Federal Reserve could cut interest rates by 50 basis points at its next meeting, adding to the growing excitement around gold. As a result, US Treasury bond yields have fallen to near their 2024 lows.
On the data front, the annual headline PPI rose by 1.7%, just below the expected 1.8%, while the core PPI, which excludes food and energy, increased by 2.4%, missing the anticipated 2.5%.
These figures suggest that inflationary pressures in the US are easing. Additionally, the US Department of Labor reported that 230,000 people filed for unemployment benefits for the first time in the week ending September 7.
This number is slightly higher than recent figures, hinting at a mild softening in the labor market.
Therefore, the weakening US Dollar and falling Treasury yields, combined with easing inflation and potential Fed rate cuts, have bolstered gold's appeal. As a result, gold prices have surged to a new all-time high, driven by heightened investor interest.
Rising Middle East Tensions Drive Investors to Gold as Safe-Haven Asset
On the geopolitical front, a series of Israeli attacks on homes in Gaza’s Nuseirat refugee camp has resulted in the deaths of six Palestinians, raising the day’s toll to at least 40, according to medical sources.
This escalation follows recent Israeli airstrikes that killed at least 18 people, including six UNRWA staff, at a shelter for displaced civilians in Nuseirat. The UNRWA chief has condemned the ongoing violence, calling it “endless and senseless.”
Meanwhile, the USS Theodore Roosevelt is returning home, ending the Pentagon’s rare decision to keep two US Navy aircraft carriers in the Middle East amidst concerns of escalating conflict.
Therefore, the escalating violence and geopolitical uncertainty in the Middle East, including Israeli attacks and the return of the USS Theodore Roosevelt, have heightened market concerns. This turmoil is likely to drive more investors toward gold as a safe-haven asset.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,568.68, marking a modest increase of 0.35% as it hovers near critical technical levels.
The precious metal has sustained bullish momentum in recent sessions, but key indicators suggest a potential pause or slight retracement.
With the Relative Strength Index (RSI) elevated at 76, gold is in overbought territory, signaling the possibility of a near-term pullback.
The pivot point stands at $2,564.78, acting as a critical juncture for future price movements. Immediate resistance is seen at $2,574.26, followed by $2,585.24 and $2,596.51, which could cap further upside if the momentum falters.
Should prices break through these resistance levels, the bullish trend may continue, potentially targeting new highs.
However, the downside risk is notable given the elevated RSI and potential for profit-taking. Immediate support sits at $2,557.04, with subsequent support levels at $2,546.20 and $2,536.91.
A failure to hold these levels could shift the sentiment towards a more bearish outlook, especially as the 50-day Exponential Moving Average (EMA) at $2,511.14 provides a more medium-term support foundation.
From a technical perspective, a sell strategy below $2,575 appears prudent, with a take-profit target of $2,557. This setup aligns with the overbought conditions and the possibility of a near-term correction.
A stop-loss at $2,585 is recommended to manage risk, should bullish momentum persist unexpectedly.
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