The gold price bulls are leading the market, with gold holding onto small gains in early European trading on Tuesday. Although the rise is steady, it remains below last week’s peak. Federal Reserve Chair Jerome Powell’s recent comments hinted that interest rates may not be lowered aggressively, which helped boost the US Dollar (USD). A stronger dollar usually makes gold less attractive, creating a bit of a challenge for gold prices.
Despite this, gold remains in a good position as traders expect that the Federal Reserve might cut interest rates further due to slower US inflation. Ongoing tensions in the Middle East are also driving demand for gold, which is seen as a safe-haven investment. Additionally, hopes that China’s economic stimulus will increase demand for gold are supporting the gold price bulls ahead of key US economic data.
Middle East Tensions and Gold’s Safe-Haven Demand
The current unrest in the Middle East, particularly between Israel and Lebanon, is adding to the demand for gold as a safe investment. Despite the strengthening US Dollar, gold price bulls continue to find support from the ongoing geopolitical risks.
China’s Economic Stimulus and Its Impact on Gold
China’s recent economic stimulus measures have encouraged investors to take more risks in other assets, which has reduced some of the interest in gold. However, the gold price bulls are still hopeful, as China’s economic recovery is expected to boost demand for physical gold in the long term.
Federal Reserve’s Role in Gold Prices
Jerome Powell, the Federal Reserve Chair, has signaled that two more interest rate cuts could happen this year if the US economy stays on track. This announcement has made traders less confident in expecting aggressive rate cuts. As a result, some investors took profits, leading to a slight dip in gold prices. However, the chance of rate cuts later in the year, combined with geopolitical issues, continues to give strength to the gold price bulls.
Focus on Upcoming US Economic Data
Investors are now looking ahead to US economic data like the ISM Manufacturing PMI and JOLTS Jobs report. This data will give insight into the strength of the US economy and could influence gold prices. If the data shows signs of weakness, it could lead to more interest rate cuts from the Federal Reserve, which would be positive for gold.
Key Technical Levels for Gold Price Bulls
Technically, gold is at a crucial level. A key support zone lies between $2,625 and $2,624. If prices fall below this, we could see further declines toward $2,600 and possibly down to $2,560 or $2,530. However, if gold price bulls push the price above $2,657, it could trigger a rally toward $2,672, with the next target being $2,700, which would open up more upside potential.
Gold price bulls are holding strong despite some challenges. Investors are now waiting for upcoming US economic data to see where the market might go next. With geopolitical tensions still high and China’s stimulus plans unfolding, gold remains a key asset for those looking for safety.
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