The price of gold picks up steam once more and receives support from several variables.
Wednesday’s Asian session sees modest purchasing of gold. Which recovers some of the previous day’s losses to reach a four-week low between $1,923 and $1,922. Although it has gained around 0.20% for the day. The XAUUSD is still trading just below the $1,930 mark. And any meaningful upside still remains elusive.
The safe-haven XAUUSD benefits from a moderate US Dollar decline and a milder risk tone.
The US Dollar (USD)’s minor decline and the overall lower tone in the equities. Markets wind up being the main factors supporting the gold price. Weaker The announcement of Chinese trade figures on Tuesday rekindled concerns about the world’s second-largest economy’s deteriorating prospects. The debt ratings for a number of US institutions were also reduced by Moody’s. Which decreased investor interest in risky assets. The safe-haven precious metal typically benefits from the anti-risk flow.
Bets on additional rate increases by the Federal Reserve could limit future profits.
The US Dollar-denominated gold price is currently benefiting from the USD Index (DXY). Which tracks the Greenback versus a basket of currencies. Remaining down below a one-month top reached on Tuesday. The Philadelphia Federal Reserve Bank President Patrick Harker’s overnight dovish comments. In which he said that they will likely start cutting the policy rate sometime next year, prevent USD bulls from putting new wagers, while the downside is more likely to remain contained.
participants in the market seem confident that, despite the US economy’s extraordinary resilience, the Fed will maintain its aggressive posture. The eagerly anticipated US jobs report, which highlighted the labor market’s sustained tightness and increased the likelihood of a gentle landing, helped to increase the odds. In addition, Fed Governor Michele Bowman left open the possibility of one further 25 bps lift-off in September or November on Monday, which should continue to support the USD.
Ahead of the Thursday release of the most recent US consumer inflation data, traders could also opt to take a break. The vital US CPI report will have a significant impact on market expectations on the Fed’s path for future rate hikes. In turn, this will fuel USD demand and influence how the price of gold will fluctuate in the future. Therefore, it will be wise to hold off on buying until there is substantial follow-through before concluding that the XAUUSD has formed a short-term bottom.
