The price of gold rose in the overnight trade yesterday. The US economy is strong after the dollar’s gross domestic product (GDP) increased. Despite this, the price of gold continues to rise in anticipation of the first interest rate cut by the Fed.
Market sentiment is positive, as traders continue to focus on data that could confirm the size of the Fed’s (Fed) first interest rate cut. Meanwhile, the US Bureau of Economic Analysis showed that the country grew in the second quarter of 2024 above the original version with a decrease in the price index for personal consumption expenditures (PCE).
At the same time, the US Department of Labor revealed that fewer than expected Americans applied for unemployment benefits, which is a relief for the Fed, which acknowledged in Powell’s speech that employment risks are tilted to the upside.
Despite that, the golden metal extended its gains above half percent even though the US 10-year Treasury note yield rose two basis points to 3.86%. Meanwhile, the US Dollar Index (DXY), which tracks the buck’s value against a basket of six currencies, climbed 0.33% to 101.38.
Later today, the Fed’s preferred inflation gauge, the core Personal Consumption Expenditures Price Index (PCE) is expected to tick a tenth higher, according to the consensus.
If US economic data continues to be weak, the gold price uptrend is likely to persist, fueling speculation about a larger rate cut by the Fed.
Furthermore, The second estimate of US GDP for Q2 2024 showed a significant increase from 1.4% in Q1 to 3%, surpassing estimates of 2.8%. The Personal Consumption Price Expenditures (PCE) Deflator indicated that inflation dipped from 3.1% to 2.5% QoQ, slightly higher than the anticipated 2.3%.
Initial Jobless Claims for the week ending August 24 decreased from 233K to 231K, slightly below the estimate of 232K, which have limited impact on the prices.
Technical Outlook : Gold Futures
Gold prices touched 72,249 yesterday, prices rose by 0.60% to 72,188 compared to the previous day’s close of 71,743.00.
In the chart above, prices are trying to break the nearby barrier of 72,280 and form an ascending triangle pattern. Both of these indicate strong movement in the near future.
A break above 72280 to 72850-73550.00 is considered. Otherwise, on the downside, 71150 will be the key support below and prices will return to 70700-69850.
The overall program is based on economic data released without each group. So be careful
Happy Trading!
Commodity Samachar
Learn and Trade with Ease
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