- Gold price consolidates after last week’s rate cut rally.
- If the US PCE figures miss forecasts, investors will expect a more dovish Fed.
- Middle East tension supported gold on Thursday.
The gold outlook is bullish as investors await more US inflation data for clues on the size and pace of Fed rate cuts. Despite brief pullbacks, gold’s bullish trend has remained due to rate-cut optimism and safe-haven demand.
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Spot gold fell on Wednesday as the dollar strengthened amid speculation before Friday’s inflation figures. Prices have fluctuated this week, consolidating after last week’s rate cut rally. On Friday, Powell said it was time for the Fed to pivot and lower interest rates. As a result, investors increased bets for a September rate cut, pushing Treasury yields lower. Meanwhile, gold, a non-yielding asset, rallied.
However, this week, there has been a mix of rate cut optimism, caution ahead of data, and geopolitical tensions. Caution has pushed most investors to take profits ahead of Friday’s PCE price index report. At the same time, prices have bounced higher at the likelihood of further evidence that inflation is declining.
If the PCE figures miss forecasts, investors will expect a more dovish Fed. Consequently, the XAU/USD price will rally. On the other hand, if inflation meets forecasts or comes in slightly higher, gold might ease briefly. Market participants are fully expecting a rate cut and it will take a lot to change this outlook. Therefore, there is likely more upside potential for gold.
Meanwhile, Middle East tension supported gold on Thursday as the war in Gaza intensified. Israel engaged in missile wars with Hezbollah that have raised fears of escalation. Consequently, investors have bought more safe-haven assets like gold.
Gold key events today
- Prelim US GDP q/q
- US unemployment claims
Gold technical outlook: Bulls retest 2520.09 resistance
On the technical side, the XAU/USD price is retesting the 2520.09 solid resistance level. The bias is bullish since the price trades above the 30-SMA with the RSI over 50. At the same time, the price has made a series of higher highs and lows, indicating a developed bullish trend.
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The trend paused and started consolidating with support at 2480.38 and resistance at 2520.09. However, bulls remained stronger since the price respected its bullish trendline. Consequently, it might soon breach the range resistance to make a new high.
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