- Gold price kicks off the new week on a weaker note amid the emergence of some USD buying.
- Bets that the Fed will cut rates in September should cap the USD gains and lend some support.
- The US political uncertainty after Trump’s assassination attempt also warrants caution for bears.
Gold price (XAU/USD) trades with a negative bias for the second straight day on Monday and is pressured by the emergence of some US Dollar (USD) buying. The precious metal, however, manages to hold above the $2,400 mark and remains well within the striking distance of its highest level since May 22 touched last week amid growing acceptance that the Federal Reserve (Fed) will start cutting interest rates in September.
Moreover, investors have been pricing in the possibility that the US central bank will lower borrowing costs in December, which might hold back the USD bulls from placing aggressive bets and continue to lend some support to the non-yielding Gold price. Apart from this, the US political jitters in the wake of an alleged assassination attempt on former US President Donald Trump should limit losses for the safe-haven XAU/USD.
Daily Digest Market Movers: Gold price bears remain on the sidelines amid rising September Fed rate cut bets
- The US Dollar attracts some buyers on Monday and reverses a part of its recent losses to over a three-month low, which, in turn, is seen exerting some pressure on the Gold price for the second straight day.
- Data published by the US Bureau of Labor Statistics on Friday showed that the Producer Price Index (PPI) for final demand rose by 2.6% on a yearly basis in June, above consensus estimates for a reading of 2.3%.
- Adding to this, political uncertainty in the wake of a failed assassination attempt on US Presidential candidate Donald Trump benefits the Greenback, though dovish Federal Reserve expectations might cap gains.
- The current market pricing indicates over a 90% chance that the Fed will start its rate-cutting cycle in September and the bets were lifted by another tame US consumer inflation report released last Thursday.
- Furthermore, the US political situation should keep investors’ appetite for riskier assets largely in check and lend some support to the safe-haven XAU/USD, warranting caution before positioning for deeper losses.
- Traders now look to the release of the Empire State Manufacturing Index from the US for short-term opportunities ahead of Fed Chair Jerome Powell’s speech later during the North American session.
Technical Analysis: Gold price might continue to attract some buyers near the $2,390 resistance-turned-support
From a technical perspective, the emergence of some dip-buying on Friday reaffirmed strong support near the $2,390-2,388 resistance breakpoint. Moreover, oscillators on the daily chart are holding in positive territory and are still away from being in the overbought zone. This, in turn, suggests that the path of least resistance for the Gold price is to the upside. Hence, a slide back below the $2,400 mark might still be seen as a buying opportunity and remain limited.
Some follow-through selling, however, has the potential to drag the Gold price to the $2,358 region with some intermediate support near the $2,372-2,371 area. The subsequent fall might expose the 50-day Simple Moving Average (SMA) support, currently pegged near the $2,350 region.
On the flip side, last week’s swing high, around the $2,425 region now seems to act as an immediate hurdle, above which the Gold price is more likely to aim back towards challenging the all-time peak, around the $2,450 region touched in May. A sustained strength beyond the latter will be seen as a fresh trigger for bullish traders and set the stage for an extension of the commodity’s recent move-up witnessed over the past two weeks or so.
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