Gold price rose again on Monday, nearing record highs but falling slightly short of the all-time peak of $2,450 during the Asian trading session. Currently, gold is trading at $2,433, marking a 0.80% increase. Investors are closely watching central banks like the Federal Reserve, anticipating potential interest rate cuts in 2024.
Economic Sentiment and Market Reactions
The market shows mixed but generally positive sentiment. Major indices such as the S&P 500 and NASDAQ 100 gained, while the Dow Jones remained relatively flat. Last week’s inflation data from the U.S. was better than expected, leading to more speculation that the Federal Reserve could reduce borrowing costs, possibly starting in September. According to the CME FedWatch Tool, there is a 76% chance that the Federal Reserve will lower rates by 0.25% in September, with the possibility of two additional cuts by the end of the year, bringing rates down to 4.75%–5.00%.
Key Economic Events This Week
Federal Reserve officials will speak throughout the week, providing insights into the U.S. economy. Additionally, the Federal Reserve’s meeting minutes are expected on Wednesday. On Thursday, a report on unemployment benefits claims will shed more light on the strength of the U.S. job market, along with the release of the Chicago Fed National Activity Index.
Gold’s Resilience Amid Market Fluctuations
Despite the Federal Reserve’s hawkish stance, gold continues to climb. Even with rising U.S. Treasury bond yields and a stronger dollar, gold prices remain resilient. The U.S. 10-year Treasury yield increased slightly to 4.437%, while the U.S. Dollar Index (DXY), which measures the dollar’s strength against other currencies, rose to 104.55.
The market’s response to recent inflation data, which showed slower price increases, has also fueled optimism about future interest rate cuts. However, Federal Reserve officials caution that one report doesn’t guarantee a long-term trend.
Federal Reserve Comments
Several Federal Reserve members have commented on the economy. Raphael Bostic from the Atlanta Federal Reserve said that while borrowing conditions are strict, it will take time before inflation trends become more predictable. Vice-Chair Michel Barr echoed this sentiment, emphasizing the need to maintain tight monetary policies for now. Meanwhile, Vice-Chair Philip Jefferson admitted that predicting inflation trends is difficult but noted that borrowing conditions remain strict. Loretta Mester of the Cleveland Federal Reserve added that while recent inflation data looks promising, the risk of inflation rising remains.
Technical Analysis of Gold Prices
Technically, gold is eyeing higher levels after hitting $2,450, with traders expecting the price to reach $2,475 or even $2,500. The bullish trend is supported by the Relative Strength Index (RSI), which shows strong buying pressure without signaling overbought conditions. However, if gold falls below $2,400, it may face further declines, potentially dropping to $2,332, $2,303, or touching the 50-day Simple Moving Average (SMA) at $2,284.
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