- By the end of last week's trading, the price of gold rose to $2,390 per ounce before closing at $2,388 per ounce.
- Furthermore, this represented a 1% decrease from the previous session as markets continued to analyze the latest economic data for clues regarding the Federal Reserve's policy outlook.
Both the monthly headline and core indicators for the US GDP contraction rate reflected higher-than-expected levels from the second-quarter report released this week. However, the upside surprises were not big enough to tame bets that the Fed is set to deliver multiple US interest rate hikes this year.
Overall, the 25 basis point US rate cut in September remains all but priced in, followed by two more rate cuts this year for a total of 75 basis points in cuts this year. Lower borrowing costs are supporting demand for gold bullion due to the lower opportunity cost of holding non-interest-bearing assets. Meanwhile, the People’s Bank of China cut its medium-term facility rate unexpectedly.
Another factor affecting gold.
The yield on the US 10-year Treasury note fell. According to reliable trading platforms, the yield on the US 10-year Treasury note fell to 4.23% on Friday, as markets assessed US consumption and income data within a narrower range as they continued to gauge the impact it might have on the Federal Reserve’s policy outlook.
New economic data showed that US personal income and spending rose at a moderate pace in June. Additionally, core personal consumption expenditure prices rose faster than markets had expected, but the lack of a more aggressive surprise kept bets that the Fed is set to keep interest rates on hold this week before delivering rate cuts in each decision for the rest of the year, totaling 75 basis points in cuts. The June report echoed key Q2 results released this week, including much higher-than-expected GDP growth, to confirm that the US economy remains strong and resilient to tightening interest rates, in line with the view that the Fed will achieve a soft landing as prices moderate and the labor market strengthens.
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Gold Price Forecast and Analysis Today:
Gold has now advanced to trade near its 100-hour moving average. As a result, gold is poised to enter overbought levels on the 14-hour Relative Strength Index (RSI). In the near term, based on the hourly chart, the yellow metal is trading within an ascending channel formation. The 14-hour RSI has also risen to approach overbought levels on the indicator. Therefore, bulls will target extended gains around $2,406 or higher at the $2,424 resistance. On the other hand, bears will look to pounce on potential pullbacks around $2,370 or lower at the $2,353/oz support.
In the long term, based on the daily chart, the XAU/USD pair is also trading inside an ascending channel formation. However, the 14-day RSI has recently declined to avoid a rally to overbought levels. Therefore, bears will target extended pullbacks around $2,334 or lower at the $2,283/oz support. On the other hand, bulls will look to ride the current wave of gains towards $2,448 or higher to the $2,497/oz resistance.
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