Gold price is showing signs of a rebound from the $2,400 level after a brief correction from its record high of $2,484. The current market conditions favor Gold as the US Dollar remains weak and US Treasury bond yields are sluggish, despite ongoing risk aversion.
Key Factors Driving Gold Price Movement
Recent political developments in the US, including President Biden dropping out of the election race and endorsing Vice President Kamala Harris, have contributed to the weaker US Dollar. Market sentiment is also impacted by expectations of policy easing by the US Federal Reserve in the event of a Democratic win, leading to bearish pressure on the Greenback.
Positive trends in US equity and Treasury futures are further weighing on US Treasury bond yields, providing support for Gold as a safe-haven asset. Additionally, concerns over China’s economic growth and a busy week of corporate earnings reports are keeping investors on edge.
Market expectations for a September rate cut by the Fed are high, with futures showing a 97% chance according to the CME Group’s FedWatch Tool.
Technical Analysis of Gold Price
The 14-day Relative Strength Index (RSI) for Gold has turned north above the 50 level, indicating a renewed buying interest. The 21-day and 50-day Simple Moving Averages (SMA) Bull Cross also support the uptrend in Gold price.
If the rebound continues, Gold price could test the $2,425 resistance level, followed by the previous high of $2,450 and the record high of $2,484. On the downside, a break below $2,400 could lead to a test of the 21-day SMA at $2,376 and the 50-day SMA at $2,360.
Analysis Breakdown:
In summary, Gold price is benefiting from a weaker US Dollar and subdued US Treasury bond yields amid ongoing risk aversion. Market sentiment is also influenced by political developments in the US and expectations of Fed policy easing. Technical indicators suggest a bullish outlook for Gold, with key resistance levels at $2,425, $2,450, and $2,484. Investors should monitor upcoming economic data releases and corporate earnings reports for further insights into Gold price movements.