GOLD Price Analysis – Sep 18, 2024
Daily Price Outlook
Gold (XAU/USD) is currently struggling to maintain gains and has slipped to a fresh daily low around $2,567 in the past hour. This decline occurs despite market expectations of a potentially larger interest rate cut by the Federal Reserve (Fed) this Wednesday, which could weigh on the US Dollar (USD).
Moreover, ongoing geopolitical tensions in the Middle East and political uncertainty in the US ahead of the November election might offer further support for gold.
Traders are closely awaiting the Federal Open Market Committee (FOMC) meeting results and updated economic projections before committing to significant positions in gold.
US Economic Data and Fed Rate Cut Expectations Impact Gold and USD
On the US front, the recently released economic data showed a modest increase in Retail Sales for August, rising by 0.1% compared to a decline of 0.2% expected. However, sales excluding autos missed forecasts, also expanding by 0.1%.
This data caused a temporary bounce in the US Dollar as traders covered short positions, pushing the USD away from its lowest level since July 2023.
Despite this, the upward movement was limited, as expectations for a more aggressive interest rate cut by the Federal Reserve (Fed) continue to weigh on the USD.
Markets are currently pricing in a 65% chance that the Fed will cut rates by 50 basis points at the end of its two-day meeting today, which is putting pressure on the USD and supporting gold.
The anticipation of a larger rate cut is expected to attract dip-buyers to gold, helping it recover from a recent pullback near its all-time high.
In the meantime, the yield on the benchmark 10-year US government bond bounced from a 16-month low following the retail sales data, but this move did not have a significant impact, as dovish Fed expectations dominate the market.
Geopolitical Tensions Boost Gold Prices as Safe-Haven Asset
Another factor that could help gold prices stay higher is ongoing geopolitical uncertainty. Recent conflicts in the Middle East and political instability in the US are keeping investors cautious and supportive of gold as a safe-haven asset.
In Lebanon, simultaneous explosions from handheld pagers used by Hezbollah have killed at least nine people and wounded over 2,700, raising fears of a broader regional conflict. Hezbollah has blamed Israel for the blasts, adding to tensions.
In addition, North Korea recently test-fired multiple ballistic missiles towards South Korean and Japanese waters, further heightening global security concerns.
The ongoing war between Israel and Hezbollah, with significant casualties reported, also contributes to the uncertainty. The recent Israeli attacks have reportedly resulted in the deaths of over 11,000 people in Gaza and the West Bank since October 7, according to the Palestinian Education Ministry.
This geopolitical turmoil supports gold prices by reinforcing its role as a safe-haven investment during times of global instability.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,571.08, down slightly by 0.01%, reflecting some consolidation near critical levels. The price hovers just below a key pivot point of $2,590, with immediate resistance at that same level.
A breakout above $2,590 could signal further upside, with the next resistance targets positioned at $2,602 and $2,613. Conversely, on the downside, immediate support lies at $2,556, with further levels at $2,546 and $2,535.
The RSI stands at 56, indicating neutral momentum, but with the potential for more upside if buying pressure increases.
The price is currently hovering above the 50-day EMA of $2,540, which reinforces a potential bullish bias in the near term. However, failure to maintain this level could prompt a bearish reversal.
Traders are likely to remain cautious ahead of key economic events this week, including the FOMC meeting, which could inject volatility into the markets. A break below the $2,561 mark may trigger selling, targeting the $2,590 take-profit level, with a stop-loss at $2,546.
However, should the price maintain its position above $2,556, a bullish continuation could unfold, pushing Gold toward higher resistance levels.
In the short term, Gold is caught between a bearish signal below $2,561 and the opportunity for a bullish reversal if momentum can carry it above $2,590.
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