Investors Optimistic as Soft Inflation Data Fuels Rate Cut Speculations
The latest soft inflation data has fueled hopes among traders for a 50 basis points interest rate cut by the Federal Reserve in September, although the majority still expects a 25 bps cut. With softer PPI numbers indicating a potential decline in July’s inflation, the upcoming Wednesday could see further developments.
A sudden surge in gold futures this week was triggered by reports of Iran’s retaliation plans against Israel, following the killing of a Hamas leader in Tehran earlier in August. However, despite this weekly gain, gold futures are facing a significant resistance at $2525, and breaching this level could attract gold bears if the support weakens.
The current geopolitical tensions suggest a volatile Wednesday ahead, as gold futures are poised at a record-high, raising the risk of a sudden sell-off that may drive prices down to $2458 before the week concludes. In the daily chart, gold futures are hovering below a crucial resistance level, making the situation precarious for the bulls unless supported by positive CPI data. Immediate support levels stand at $2470 and $2451, with a strong backing at the 50 DMA of $2400.
In the 1-Hr. chart, gold futures exhibit indecisiveness, hinting at continued volatile movements till the week’s end. Analysis shows that traders should closely monitor key support and resistance levels to navigate through the current market uncertainties for better financial decision-making.