Gold price is extending its uptrend into a third day.
The Gold price is extending its uptrend into a third day on Thursday, following two consecutive days of increases. The gold price is firming. As the US Dollar (USD) continues its corrective slide from two-week highs. Ahead of the release of the US advance Gross Domestic Product (GDP) statistics for the second quarter. The European Central Bank’s (ECB) policy pronouncements. And President Christine Lagarde’s news conference may potentially cause price volatility in gold.
The focus moves to the ECB rate decision and the US second quarter. GDP Gold prices soared on Wednesday after the US Federal Reserve’s (Fed) policy announcements. And Chairman Jerome Powell’s remarks failed to match ardent expectations for another rate rise in September. Following its July meeting, the Fed hiked rates by the widely anticipated 25 basis points (bps) to a 22-year high of 5.25%-5.50%. And left the door open for additional tightening this year without committing to the date of the next lift-off.
Powell expressed optimism in the overall economic performance. Despite a tightening job market and higher prices. He did not, however, provide any forward advice. Instead emphasizing a ‘data-dependent’ and ‘meeting-by-meeting’ approach.
The US dollar is licking its wounds ahead of advance Q2 GDP data, and the ECB decision is also important.
The Fed President’s statement was largely perceived as patient in terms of the Bank’s interest rate stance. Which impacted on the US Dollar. Among its major competitors, sending the price of non-interest-bearing gold to multi-day highs above $1,980. The benchmark 10-year US Treasury bond rates have fallen from a 10-day high of 3.922% to roughly 3.85%. Further boosting the gold price.
With the Fed event behind us, all eyes are on the ECB policy pronouncements and the US preliminary Q2 GDP data release. Which might provide additional trading impetus to gold traders. The ECB is largely expected to raise rates by 25 basis points, thus President Lagarde’s news conference will be eagerly watched for any clues on a possible September rate rise. Lagarde is still in a difficult position, amidst renewed recession worries in the Eurozone and stubborn core inflation.
A dovish ECB rate increase, Similar to the Fed, might offer further legs to the gold price’s continued ascent. However, positive US Q2 GDP figures might limit Gold’s rise, as the US economy’s resiliency could rekindle hawkish Fed views. Economists estimate the US economy to increase 1.8% year on year in Q2, up from 2.0% previously projected. Annually, US Q2 GDP is expected to rise 3.0%, compared to a 4.1% increase in the first quarter.
Technical Analysis
Gold price is extending its positive momentum on the daily chart, having reclaimed the bullish 100-Daily Moving Average (DMA) support-turned-resistance, currently at $1,966.
The next goal for gold purchasers is a two-month high of $1,988, above which the $2,000 level will be reached. be put to the test.
The 14-day Relative Strength Index (RSI) is pointing north above the midline, and the upward-sloping 21-day moving average (DMA) is about to cross the 50-day DMA, indicating a Bull Cross. In the short run, technical indications continue to favor gold buyers.
On the other hand, immediate support is available around the intraday low of $1,970, below which the 100 DMA of $1,966 will be tested. A sustained break below the latter will reveal the intersection of the flattish 50 DMA and the bullish 21 DMA at about $1,947.
Below the latter, a new downturn will be fueled, with gold sellers prepared to test the $1,940 round number.
