Gold price (XAU/USD) reached $2,500 on Friday after bouncing back from support at $2,470. This rise happened due to a weaker US Dollar (USD) and lower long-term US Treasury yields. Even though short-term yields rose slightly, the market still believes interest rates will fall, which is good news for Gold since it doesn’t earn interest.
Positive Outlook Ahead of Powell’s Speech
The outlook for Gold is positive as everyone waits for Federal Reserve (Fed) Chairman Jerome Powell’s speech at the Jackson Hole symposium. Powell is expected to confirm that the Fed will likely cut interest rates at their September 18 meeting.
Gold Supported by Weak US Economic Data
Gold price is up more than half a percent after dropping over 1.0% on Thursday. This drop was due to a lower chance of a 0.50% rate cut in September. The likelihood fell from mid-30% to mid-20%, according to the CME FedWatch tool. Mixed economic reports, including Purchasing Manager Survey (PMI) and Jobless Claims data, along with cautious comments from Fed officials, influenced this shift.
Preliminary S&P Global Composite PMI for August dropped slightly to 54.1 from 54.3 in July, better than the predicted drop to 53.5. US Manufacturing PMI fell to 48.0 from 49.6, while Services PMI rose to 55.2 from 55.0, which exceeded the expected drop to 54.0.
Jobless Claims were mixed, with Initial Jobless Claims rising to 232K, slightly higher than the previous week’s revised 228K and the expected 230K. However, Continuing Claims were slightly lower than expected but still higher than before.
Technical Analysis: Gold Bounces Back from Support Levels
Gold XAU/USD analysis found support at the top of its previous range and bounced back on Friday. Despite recent dips, the short-term trend is still upward, favoring long positions.
XAU/USD Daily Chart Insights
The breakout on August 14 set an upside target of around $2,550, based on the 0.618 Fibonacci ratio. This target is the minimum expected after a breakout, according to technical analysis.
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