On the final trading day of the week, gold is flirting with two-month highs just above the $1,960 mark. As US Treasury bond rates halt their slide. Though the impact looks to be mitigated by widespread weakening in the United States Dollar (USD). Gold traders will be looking for new direction from the next batch of top-tier US economic data. As well as the end-of-week flows.
Gold prices are supported by the Federal Reserve’s dovish bets.
Following the projected 25 basis point (bps) rate rise in July. The softer-than-expected US Producer Price Index (PPI) bolstered predictions. That the US Federal Reserve (Fed) will end its rate hike program later this year. In June, US PPI inflation fell more than predicted. to 0.1% on an annual basis. Down from a downwardly revised 0.9% in May.
Softer PPI data followed Wednesday’s US Consumer Price Index (CPI) data. Which showed that annual CPI inflation in the US fell to 3% in June. The 12th straight month of reductions and the lowest level since March 2021. Annual US core inflation fell to 4.8% in June, compared to 5.0% predicted and 5.3% before. While monthly core CPI gained 0.2% in the reported month, compared to a 0.3% rise expected and 0.4% in May.
In the midst of dismal US economic data, the US Dollar Index retreated to 15-month lows of 99.60. Propelling gold prices to mid-June highs of $1,968. US Treasury bond rates also continued to fall. Worsening the situation. the pain in the Greenback. While boding well for the non-yielding Gold price.
Despite hawkish statements from Fed members given on Thursday. The US Dollar struggled to find support amid growing dovish wagers on the Fed’s rate rise future. Mary Daly, president of the Federal Reserve Bank of San Francisco. Said it was too early to declare success over inflation, adding that “we need to move rates up to restrictive territory.”
Meanwhile, Federal Reserve Governor Christopher Waller has made a statement. “The robust strength of the labor market and the solid overall performance of the US economy gives us room to tighten policy even further.” Waller’s statements, according to the Wall Street Journal’s (WSJ) Nick Timiraos. Signal that the September meeting might be a live one for a prospective rate hike. If the US Dollar makes a slight rebound effort. As a result of the resurgence of risk-off trades or as a result of end-of-week short covering. Gold prices might fall toward $1,940. The US University of Michigan (UoM) Preliminary Consumer Sentiment and Inflation Expectations data, on the other hand, will be critical in driving the US Dollar dynamics, and hence the gold price movement.
Gold Technical Analysis
The gold price broke out of the falling wedge, but purchasers paused just below the June 16 high of $1,968.Meanwhile, the 14-day Relative Strength Index (RSI) has halted and become flat, indicating that a retreat is possible.
The 50-Daily Moving Average (DMA) is looking bearish, lending credence to the gold price fall. to remove the 100 DMA from above. If it happens on a daily closing basis, it validates a Bear Cross, indicating a possible downswing in the short future.
Immediate support now awaits at the convergence of the 50 and 100 DMAs at $1,954, below which a strong decline toward the $1,940 demand region cannot be ruled out. Further south, the low of $1,9332 set on Tuesday might be challenged.
A sustained break over the June 16 high of $1,968 will open the road to the June 2 high of $1,984.If the extra upside gains pace, gold investors will aim the $2,000 milestone.
