The gold price (XAU/USD) continues to gain momentum, rising for the third consecutive day on Thursday, surpassing the $2,380 mark in early European trading. Although it remains below the week’s high, the combination of expectations for a US rate cut in September and Federal Reserve (Fed) Chair Jerome Powell’s recent remarks has weakened the USD, boosting gold. In addition, ongoing central bank purchases, global economic uncertainties, and geopolitical tensions provide further support.
2. Factors Influencing Gold Price
The current risk-on market environment, however, may limit further gains for gold as traders await the latest US consumer inflation data. The upcoming US CPI report is crucial for insights into the Fed’s rate decision, which will impact USD demand and influence gold prices. Despite this, the overall trend suggests a favorable outlook for XAU/USD.
3. Daily Digest: Market Movers
The anticipation of the Fed’s rate cuts in September and December continues to undermine the USD weakness, supporting gold prices. Fed Chair Powell’s comments about stable prices and future neutral rates, despite some economic cooling, have fueled riskier asset investments, capping gold’s upside potential. Powell’s commitment to a 2% inflation target highlights the importance of the upcoming US consumer inflation report, deterring fresh bullish bets on gold.
4. Key Data Points
The CPI is projected to increase by 0.1% in June, with the annual rate slowing from 3.3% to 3.1%. Core CPI, excluding food and energy, is expected to remain steady at 3.4% YoY. This crucial data will shape the Fed’s rate cut trajectory, influencing USD dynamics and the next directional move for gold.
5. Technical Analysis
Technically, gold’s recent break above the 50-day SMA and the $2,365 resistance zone signals a bullish trend. Oscillators on the daily chart indicate upward momentum, suggesting a potential rise beyond $2,400, with intermediate resistance near $2,386-2,387 and $2,393. Conversely, any downward correction may find support around $2,360-2,358 and the 50-day SMA at $2,345. A decisive break below this could shift the trend toward bearish territory, targeting $2,319-2,318, $2,300, and $2,285.
6. USD Performance in the Last Week
Over the past week, the USD has weakened the most against the Pound Sterling, as shown in the percentage change heat map of major currencies.
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