The gold price consolidation (XAU/USD) is currently trading around $2,450, with some fluctuations between minor gains and losses. This consolidation is occurring just below a two-week high achieved during the Asian session. As market sentiment shifts, the near-term outlook remains positive for gold, driven by expectations of an impending Federal Reserve (Fed) rate cut.
Federal Reserve Outlook and Market Impact
On Wednesday, the Fed maintained its benchmark interest rate at 5.25%-5.50%, acknowledging progress on inflation and a cooling labor market. Fed Chair Jerome Powell hinted at a possible rate cut in September if inflation remains stable. This dovish stance, combined with a weak ADP report showing slower labor market and wage growth, has further supported the gold price consolidation. The 10-year US government bond yield fell to its lowest level since February, prompting aggressive selling of the US Dollar (USD). Geopolitical tensions in the Middle East have also reinforced gold’s safe-haven appeal, pushing its price to a two-week high.
Technical Analysis: Bullish Trend Persists
Technically, gold price bulls are currently in control, supported by a recent breakout through the $2,412-$2,413 resistance level. This breakout followed a bounce from the 50-day Simple Moving Average (SMA) support. The price movement above $2,450, along with positive daily chart oscillators, indicates a bullish trend. The next significant resistance levels are around $2,468-$2,469 and $2,483-$2,484, with the potential to challenge the psychological $2,500 mark if momentum continues.
Current resistance at the $2,437 area seems to protect the immediate downside, with the $2,432 level following closely. A further decline could present buying opportunities near the $2,413-$2,412 support. However, a significant drop below $2,400 could make gold vulnerable to testing the $2,384-$2,383 support zone and further to the 50-day SMA near $2,363.
In summary, gold’s price consolidation around $2,450 reflects a cautious bullish sentiment amidst an overall risk-on mood. With the Fed’s dovish outlook and geopolitical uncertainties bolstering gold’s appeal, the near-term outlook remains optimistic. Traders should monitor upcoming economic releases, particularly the US Nonfarm Payrolls report, for further direction.
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