The gold price is currently hovering around the $1,960 region, or a roughly four-week high. And is trading favorably during Thursday’s Asian session. The recent comeback from the $1,893 level, or a three and a half-month low struck in June. Appears to be extending. As the XAUUSD has now risen back above the 100-day Simple Moving Average (SMA).
Bets on the Fed ending its rate-hiking cycle are profitable. gold cost
most recent consumer price increases published on Wednesday confirmed. Market predictions that the Federal Reserve (Fed) will maintain interest rates. Following a 25 bps lift-off at the policy meeting on July 25–26. According to the US Bureau of Labor Statistics, the Consumer Price Index (CPI) overall increased by 0.3% in June. While the annual rate decreased from 3.1% to 3%. Additionally, it was the weakest monthly increase in core prices since August 2021.
The US core CPI slowed down to 4.8% on an annual basis, which is the weakest growth in more than two years. This follows indications that the US labor market is softening, which should allow the Fed to moderate its aggressive position, benefiting the non-yielding Gold. Sliding US bond yields support XAUUSD while also weighing on the USD.
The US central bank appears to be nearing the end of its quickest monetary policy tightening cycle since the 1980s, according to market participants. As a result, US Treasury bond yields continue to fall, and the US Dollar (USD) remains depressed and close to its lowest level since April 2022. Another element supporting the US Dollar-denominated gold price is the general gloomy outlook around the US dollar. In addition to this, Thursday’s increase could also be attributable to some technical buying after the overnight breakout through the support breakpoint-turned-resistance of the 100-day SMA. However, the positive market environment may discourage bulls from making risky bets on the safe-haven XAUUSD and limit future gains.
US macro data now for new inspiration.
Investors are now focusing on the US economic calendar, which includes the release of the Producer Price Index (PPI) and the customary Weekly Initial Jobless Claims data later in the early North American session.
This will affect the USD price dynamics and give the gold price some momentum, along with the US bond yields. However, the aforementioned fundamental background appears to be firmly in favor of bullish traders and predicts that the XAU/USD’s upward movement will encounter the least amount of opposition. In light of this, any intraday corrective dip may be viewed as a buying opportunity and is therefore likely to be temporary in nature.
Technical Outlook
From a purely technical standpoint, the scene appears to be set for a move toward testing the following significant obstacle close to the $1,970-$1,972 supply zone. In order to reach the $2,010-$2,012 resistance, some follow-through purchasing could push the price of gold back up towards the psychologically important $2,000 level.
On the other hand, the 100-day SMA, which is presently near $1,952, appears to be defending the immediate downside, below which the XAUUSD might decline to the $1,935 horizontal support.
A strong break below the latter might tip the scales in favor of bearish traders and open the door to a decline below the $1,925 support on the way to the weekly low, which is close to the $1,912 level, and the $1,900 level.
