As the new week begins, the price of gold is holding steady near $2,430, following a late rebound last week. Traders are cautious due to upcoming US Consumer Price Index (CPI) data and geopolitical tensions, which are supporting the US Dollar.
Key Factors Influencing Gold Price Movement
One major factor affecting the gold market is the escalating tensions between Iran and Israel. Recent reports suggest that Iran may be planning a direct attack on Israel, leading to increased geopolitical risks. Additionally, the Israel Defense Forces intercepted projectiles from Lebanon, adding to the uncertainty in the region.
On the monetary policy front, there are expectations of a dovish stance from the US Federal Reserve, with the possibility of a 50 basis points interest rate cut in September. However, Fed Governor Michelle Bowman’s recent comments on inflation progress have raised some doubts about the extent of rate cuts.
Traders are now awaiting the US CPI data release on Wednesday, which is expected to show a slight decrease in core inflation compared to the previous month.
Technical Analysis of Gold Price
Looking at the daily chart, gold price is currently within a symmetrical triangle pattern. The RSI indicator remains bullish, indicating potential upside momentum. The 21-day SMA at $2,417 is acting as a support level for gold buyers, while a break below could signal further downside towards $2,400 and $2,388.
On the upside, resistance levels to watch are $2,459, $2,465, and $2,478.
Understanding Gold as an Investment
Gold has historically been a safe-haven asset, valued for its ability to retain value during turbulent times. Central banks often hold gold reserves to strengthen their currency and provide stability in times of crisis. The price of gold is influenced by various factors, including geopolitical tensions, inflation, and currency movements.
Investors should keep an eye on upcoming economic data releases and geopolitical developments to make informed decisions about gold investments.