Gold price (XAU/USD) shows a slight positive bias during early European trading hours on Thursday. However, it lacks momentum and stays below a nearly two-week high reached the previous day. The strong bullish sentiment in global equity markets acts as a headwind for the safe-haven metal amid thin liquidity due to the US Independence Day holiday. Traders await the closely-watched US Nonfarm Payrolls (NFP) report on Friday before making significant moves.
Fed Rate Cut Bets Cushion Gold Price
Despite the challenges, the downside for gold appears cushioned by expectations that the Federal Reserve (Fed) will start cutting rates later this year. Softer US macro data released on Wednesday hinted at labor market weakness and a slowing economy, reaffirming these expectations. The minutes from the last FOMC meeting revealed that most policymakers believe US economic growth is cooling. This caused a drop in US Treasury bond yields and pushed the US Dollar to a three-week low, potentially supporting gold.
Market Movers: Gold Faces Positive Risk Tone
Recent US macro data has strengthened market bets on an imminent Fed rate cut, benefiting gold. The Automatic Data Processing (ADP) reported a rise in private-sector employment by 150,000 in June, slightly below expectations. Additionally, US jobless claims reached a 2-1/2-year high last week, indicating easing labor market conditions. The Institute for Supply Management’s (ISM) Services PMI fell into contraction territory, marking its lowest level since May 2020. These data points suggest a loss of economic momentum, supporting the expectation of a Fed rate cut in September and December. The minutes from the June FOMC meeting showed policymakers’ concern about economic slowing and easing price pressures, although more favorable data is needed to confirm sustainable inflation reduction.
Technical Analysis: Bullish Momentum for Gold
From a technical perspective, the recent breakout through the 50-day Simple Moving Average (SMA) and positive oscillator movements on the daily chart favor bullish traders. Sustained strength beyond the $2,365 area would confirm a constructive outlook, aiming for the $2,400 mark and potentially challenging the all-time high of around $2,450. On the downside, significant pullbacks may attract buyers near the 50-day SMA resistance breakpoint around $2,339-2,338. Further support is at $2,319-2,318, and a break below could lead to a test of the $2,285 zone. A decisive fall below this level could reveal the 100-day SMA support around $2,258, potentially leading to a decline towards the $2,225-2,220 range and the $2,200 round figure.
For more insights on gold price trends, visit Daily Gold Signal and Daily Gold Update.
