- At the beginning of this week’s trading, the gold price attempted to rebound upwards due to US political concerns.
- Moreover, its gains did not exceed the resistance level of $2,412 per ounce, before retreating to the support level of $2,384 per ounce, the lowest in two weeks.
- Its initial gains this week were driven by a technical rebound after a nearly 2% drop in the previous session and supported by a weaker US dollar.
Last week, the price of gold faced downward pressures with the rise in the US dollar due to stronger-than-expected manufacturing growth in the US Mid-Atlantic region for July, while the rise in weekly unemployment claims is attributed to seasonal factors. Investors are now turning their attention to US economic data due this week to reinforce expectations of a US interest rate cut.
Key focus points include the advance estimate for second-quarter GDP growth, personal spending and income, and the June Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation measure. Meanwhile, investors are evaluating the impact of President Joe Biden ending his re-election campaign and endorsing Vice President Kamala Harris.
As for the factors affecting the gold market, the US dollar weakened slightly following Biden's withdrawal. Trusted trading platforms reported the dollar index fell to 104.2 on Monday, reacting mildly to the US political situation. As President Joe Biden ended his re-election bid and endorsed Vice President Kamala Harris, Donald Trump continues to lead the race. Recently, the dollar has been weakened against the Japanese yen. Also, it declined slightly against the euro and the pound sterling.
Last week, the US dollar rose 0.3 percent, as strong US economic data provided some support. However, it is still down about 1.5 percent so far in July, as slowing inflation has boosted bets on a rate cut by the Federal Reserve in September. Now, investors are looking ahead to key US economic reports this week including the personal consumption expenditures price index, flash purchasing managers’ indices and second-quarter GDP figures.
On another note, affecting the market, Treasury yields fell slightly. The yield on the 10-year Treasury note settled at 4.22% on Monday after President Joe Biden ended his re-election bid and endorsed Vice President Kamala Harris as the Democratic candidate. Clearly, the market reaction has been muted so far as former President Donald Trump remains the favorite to win in November. Also, slowing inflation has boosted bets on a rate cut by the US Federal Reserve in September. Now, Investors are looking ahead to more US economic data this week including second-quarter GDP, flash PMIs and the personal consumption expenditures price index report. The yield on the 2-year Treasury notes also fell to 4.52%.
On the stock trading front, US stocks began the week in the green, with the S&P 500 up 1% and the Nasdaq up 1.6%, following their worst weekly performance since April. Concurrently, the technology sector rebounded from Friday’s losses and telecommunications services also outperformed.
Meanwhile, traders are assessing the political situation in the United States after President Joe Biden ended his re-election bid and endorsed Vice President Kamala Harris as the Democratic candidate. However, Donald Trump continues to lead the presidential race. All major companies were higher: Microsoft (0.9%), Apple (1.2%), Nvidia (2%), Amazon (0.2%), Meta (1.7%), and Alphabet (2%). On the earnings front, Verizon shares fell nearly 5.7% to a 4-week low of $39.75 after the company’s earnings disappoint. It will be a big week for earnings, with Microsoft, Alphabet, and Tesla all set to report earnings.
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Gold Price Forecast and Analysis Today:
Based on the daily chart attached, the psychological resistance level of $2,400 per ounce remains the most important for further bull control over gold’s price direction. On the other hand, and in the same time frame, the support levels of $2360 and $2330 per ounce will be the most important for the bears' control over the trend. At the same time, they will arouse the appetite of gold investors to return to thinking about buying gold.
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