Gold has continued to display a firm tone, remaining near its all-time high on Friday as it awaits the release of US PCE data later today for potential fresh signals. The metal has been well supported by strong demand, serving as a safe haven asset and witnessing large purchases by central banks. Geopolitical tensions and high expectations for the Fed’s first rate cut in September have also contributed to gold’s impressive performance.
The yellow metal has seen a significant gain of approximately 22% since the beginning of the year, with another monthly gain in sight. The latest triangular consolidation under the new record high of $2531 is indicating a bullish trend, with dips being contained by a rising 10-day moving average. Higher lows, tracked by the 10DMA, continue to signal strong bids for gold. The upcoming US Federal Reserve’s policy decision will serve as a key driver for gold in the near term, with the market already pricing in a 25 basis points rate cut in September and speculating on the possibility of a more aggressive 50 basis points cut.
Today’s release of the US PCE Index, which is the Fed’s preferred inflation gauge, will provide more clarity on crucial aspects such as the size and pace of policy easing. The Core PCE Index, which is a refined indicator stripped of volatile components, is expected to remain unchanged at 0.2% month-on-month, with an annualized figure forecasted to increase to 2.7% in July from 2.6% in June. These forecasts indicate that inflation in the US remains under control, further supporting the case for a rate cut by the central bank.
In a bullish scenario, gold prices could surpass the current peak at $2531 and target levels at $2551 and $2574 based on Fibonacci projections. However, a stronger-than-expected rise in inflation could lead to a decline in gold prices, breaking initial support levels at $2511/00. This could result in a deeper drop with tests of pivotal support levels at $2475/70 and $2432. The resistance levels stand at $2531, $2551, $2574, and $2600, while support levels are at $2511, $2500, $2470, and $2452.
Gold’s impressive performance and resilience in the face of various market factors indicate a positive outlook for the precious metal. However, investors must closely monitor key data releases and market developments to navigate potential price fluctuations and capitalize on investment opportunities in the gold market.
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