Gold price dynamics and economic indicators (XAU/USD) have recently bounced back after a two-day drop, reaching a two-week low. This decline followed some positive US economic news. On Thursday, the Advance US Gross Domestic Product (GDP) report showed better-than-expected growth, suggesting a strong economy. Additionally, inflation slowed down in the second quarter of 2024, which helped stabilize financial markets and reduced gold’s appeal.
Despite this, gold price dynamics and economic indicators has remained steady below the 50-day Simple Moving Average (SMA). The market expects the Federal Reserve (Fed) to start cutting rates in September. This has kept the US Dollar (USD) low, which has helped gold attract buyers. However, traders are waiting for the US Personal Consumption Expenditures (PCE) Price Index data, due later today. This report could influence the Fed’s future decisions and impact gold prices.
Gold Price Trends and US Economic Data
The US Bureau of Economic Analysis reported that the economy grew at a 2.8% annual rate in the second quarter, better than the 1.4% rise in the previous quarter and the 2% expected. The core Personal Consumption Expenditures Price Index, which the Fed uses to measure inflation, slowed to 2.9% from 3.7% in the first quarter. Also, unemployment claims fell to 235K for the week ending July 20. This positive news led to less demand for gold, pushing prices to their lowest since June 9.
The market now expects a Fed rate cut in September and two more cuts by the end of the year. This has weakened the US Dollar and supported gold prices. Traders are keenly awaiting the June US PCE Price Index for more hints on future Fed actions and to adjust their positions for gold.
Technical Outlook for Gold Prices
Technically, gold prices have shown some stability below the 50-day SMA for the past two days. To continue the recent decline from last week’s peak, gold needs to drop below the $2,353 level. Indicators suggest that the price may face further drops. If prices recover, they might hit resistance around $2,380, with key levels at $2,391-2,392 and $2,400.
If gold breaks below the 50-day SMA and the $2,350 support level, it could lead to more declines. Prices might then test the 100-day SMA near $2,325-2,324. A drop below this could push gold towards levels below $2,300 or the lows from June.
Gold prices are influenced by economic indicators and market expectations. For the latest updates on gold prices and detailed news, visit Daily Gold Signal and check out the Daily Gold Update.
