Gold Price Jumps Ahead of Fed Powell’s Testimony as the US Dollar weakens during the early European session on Tuesday. Traders expect the US Federal Reserve (Fed) to cut interest rates in September after weak US employment data last week.
Political uncertainties in France and conflicts in the Middle East are also driving up the gold price, a classic safe-haven asset.
Factors Influencing Gold Prices
Fed Rate Cut Expectations
Gold prices may fall because the People’s Bank of China (PBoC) didn’t buy gold for the second month in a row in June. However, traders are waiting for Fed Chair Jerome Powell’s testimony before Congress and comments from Fed officials Michael Barr and Michelle Bowman. The US Consumer Price Index (CPI) inflation data, coming out on Thursday, will also be important.
Market Movers and Trends
Gold Price Jumps Ahead of Fed Powell’s Testimony as markets increase bets on a Fed rate cut in September, with a 76% chance according to the CME FedWatch tool. The US CPI inflation is expected to drop to 3.1% year-over-year in June from 3.3% in May, while core inflation is predicted to stay at 3.4% year-over-year.
Technical Analysis
Bullish Trends
Gold Price Jumps Ahead of Fed Powell’s Testimony as gold continues to trade positively, breaking above a descending trend channel since May 10. The daily chart shows gold holding a bullish trend above the 100-day Exponential Moving Average (EMA), with the 14-day Relative Strength Index (RSI) staying above the 50-midline. This means the support level is likely to hold.
Resistance and Support Levels
The psychological resistance level at $2,400 is an immediate barrier for XAU/USD. The next resistance levels are $2,432 (high of April 12) and $2,450 (all-time high). On the downside, the first target is $2,340 (former resistance level), with further selling potentially pushing prices to $2,273 (100-day EMA).
US Dollar Performance
Gold Price Jumps Ahead of Fed Powell’s Testimony and the table below shows the percentage change of the US Dollar against major currencies this week, with the USD weakest against the Canadian Dollar. The heat map shows these changes, with the base currency on the left column and the quote currency on the top row.
Conclusion
The gold market remains strong, driven by expectations of a Fed rate cut and geopolitical issues. For daily updates on gold prices, visit Daily Gold Signal. For more detailed analysis, check out the Daily Gold Update category.
