The gold price hits fresh weekly high on Thursday morning in Europe. This rise came despite a recovering US Dollar. Key economic data from the US suggested easing inflation and a slowing economy. This led to speculation that the Federal Reserve might cut interest rates twice this year, driving investors towards gold, a non-yielding asset.
1. Geopolitical and Economic Factors
Geopolitical tensions in Europe and political uncertainties also supported the gold price. Despite the Federal Reserve’s recent hawkish stance, suggesting only one rate cut in 2024, US Treasury bond yields rose, boosting the US Dollar. This limited further gains for gold.
2. Market Movers: Gold Price and US Dollar Dynamics
Uncertainty about when the Federal Reserve will cut interest rates has traders cautious, leading to a range-bound gold price. Recent US Retail Sales data indicated weak economic activity. This, combined with lower consumer and producer prices, could prompt the Federal Reserve to ease monetary policy soon. These factors contribute to the situation where the gold price hits fresh weekly high despite ongoing market fluctuations.
Market expectations are for a possible first rate cut in September, with another in November or December, providing some support for XAU/USD. Additionally, geopolitical risks in Europe and the Middle East, including Ukrainian drone strikes on Russian infrastructure and Israel’s potential conflict with Hezbollah, have driven demand for safe-haven assets like gold.
3. Technical Analysis: Key Levels to Watch
From a technical standpoint, gold bulls are watching for a breakout above the 50-day Simple Moving Average (SMA), around the $2,344-2,345 region, before making new bets. If this level is surpassed, gold prices could rise beyond $2,360-2,362, towards $2,387-2,388, and potentially reach $2,400.
On the downside, the $2,320-2,318 region is expected to offer immediate support. Further selling could push gold prices down to $2,300. A drop below $2,285 might trigger a bearish trend, with targets at $2,254-2,253 and potentially $2,225-2,220, down to the $2,200 mark.
Conclusion
Investors are looking ahead to key decisions from the Swiss National Bank and the Bank of England, which could introduce volatility to the market. Additionally, upcoming US economic data, including Weekly Initial Jobless Claims, Philly Fed Manufacturing Index, Building Permits, and Housing Starts, will be closely monitored.
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