Gold prices have closed above the 50-day SMA after weak US data increased bets that the Federal Reserve (Fed) will lower interest rates. The rise in gold prices is also influenced by ongoing conflicts in the Middle East and Ukraine, political instability in Europe, and the expansion of the BRICS trading bloc. Longer-term investors have been accumulating gold in anticipation of another rally due to multiple geopolitical and macro factors that favor the precious metal. The weak US data includes a slowdown in the US ISM Services Purchasing Managers Index (PMI) and sub-par US jobs data. Lower interest rates are positive for gold as they reduce the opportunity cost of holding the non-interest-paying asset. Technical analysis suggests that gold may rise to the $2,369 level and then the $2,388 level. However, if the compromised topping pattern's neckline at $2,279 is broken, a reversal lower may still follow with a target at $2,171. The trend is now sideways in the short and medium term, but gold remains in an uptrend in the long term. [3e387bd5]
Gold prices have been consolidating in a narrow range below the 50-day SMA pivotal resistance, struggling to find a firm intraday direction. The mixed fundamental cues have contributed to this uncertainty. Rising expectations for a September rate cut by the Federal Reserve have weighed on the US dollar and provided support to the price of gold. Geopolitical tensions and political uncertainty have also acted as tailwinds for gold. However, the gains have been capped by rising bond yields. The XAU/USD pair has been oscillating below a multi-day peak around the $2,340 region. The key US inflation data has reinforced market expectations of a rate cut by the Fed in September and again in December. The persistent geopolitical tensions and uncertainty surrounding France's snap election have also supported the safe-haven appeal of gold. The Federal Reserve has projected only one interest rate cut in 2024, while some officials have argued for keeping rates higher for longer. The increasing odds of a Joe Biden presidency have raised concerns about aggressive tariffs, which could fuel inflation and trigger higher interest rates. Central banks, particularly those in emerging economies like China, India, and Turkey, have been rapidly increasing their gold reserves. Gold is widely seen as a safe-haven asset and a hedge against inflation and depreciating currencies. Technical analysis suggests that for bulls to seize control, the gold price must break above the 50-day SMA and sustain strength beyond it. If this happens, the price could potentially challenge the all-time peak around $2,450. [0e10a5c7]
