The Gold price witnessed over one percent jumped on Monday. Gold is traditionally seen as a safe-haven asset, meaning that during times of geopolitical uncertainty, like the current conflict in Gaza and potential escalation involving Iran, investors often flock to gold to protect their wealth. This increased demand typically drives gold prices up.
Furthermore, expectations of a Federal Reserve rate cut play a crucial role in supporting prices. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors. The current market speculation, with a nearly even split between a 0.25% and 0.50% rate cut in September, further boosts gold’s appeal.
Upcoming economic data releases, such as the Consumer Price Index (CPI) and Producer Price Index (PPI), could also influence the Fed’s decision and, consequently, gold price. If these data points suggest weakening inflation or economic activity, it may strengthen the case for a rate cut, thereby providing additional support for gold prices.
Overall, the combination of geopolitical fears and dovish expectations for Fed policy creates a conducive environment for gold prices to rise.
US Consumer Price Index (CPI) data for July, to be released on Wednesday, and Producer Price Index (PPI) data on Tuesday could color expectations regarding future changes to interest rates. This in turn could impact Gold.
US CPI is expected to have risen by 0.2% in July compared with the previous month, both for headline and core. This comes after a 0.1% decline for headline in June (0.1% rise for core). If the real figure overshoots expectations, indicating sticky prices, it could bring into doubt the assumption the Fed will cut aggressively in September, hurting Gold price in the process.
PPI is forecast to have increased by 0.1% in July when figures are published on Tuesday, after a 0.2% gain in June.
Technical Outlook (Gold Price)
The Gold prices witnessed over one percent jumped on Monday. Gold is traditionally seen as a safe-haven asset, meaning that during times of geopolitical uncertainty, like the current conflict in Gaza and potential escalation involving Iran, investors often flock to gold to protect their wealth. This increased demand typically drives gold prices up.
Furthermore, expectations of a Federal Reserve rate cut play a crucial role in supporting gold prices. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors. The current market speculation, with a nearly even split between a 0.25% and 0.50% rate cut in September, further boosts gold’s appeal.
Upcoming economic data releases, such as the Consumer Price Index (CPI) and Producer Price Index (PPI), could also influence the Fed’s decision and, consequently, gold prices. If these data points suggest weakening inflation or economic activity, it may strengthen the case for a rate cut, thereby providing additional support for gold prices.
Overall, the combination of geopolitical fears and dovish expectations for Fed policy creates a conducive environment for gold prices to rise.
US Consumer Price Index (CPI) data for July, to be released on Wednesday, and Producer Price Index (PPI) data on Tuesday could color expectations regarding future changes to interest rates. This in turn could impact Gold.
US CPI is expected to have risen by 0.2% in July compared with the previous month, both for headline and core. This comes after a 0.1% decline for headline in June (0.1% rise for core). If the real figure overshoots expectations, indicating sticky prices, it could bring into doubt the assumption the Fed will cut aggressively in September, hurting Gold price in the process.
PPI is forecast to have increased by 0.1% in July when figures are published on Tuesday, after a 0.2% gain in June.
Technical Outlook
Gold prices sparked above the one week high yesterday. Prices touched an intraday high of 70,779 and settled at 70,738.
Since last week prices turned positive from the low 69,118 and made a high of 70,779. On the above chart, prices forming a bearish ABCD pattern, further prices well trading above the short term moving averages. A break above 70,975 will open the door for next resistance 72250 and +.
Else, failure will create again a probability for correction towards 69,500-69,000
Happy Trading!
Commodity Samachar
Learn and Trade with Ease
Also Read: US PPI, UK job numbers to focus today “Market Holds Its Breath: A Battle Between Bulls and Bears”
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