As the gold price extends its corrective decline early Thursday, reaching the critical $2,500 level, investors are keeping a close eye on the US Dollar’s rebound and US Treasury bond yields after a dovish Fed Minutes-induced sell-off. With US Preliminary PMI data on the horizon and Fed Chair Jerome Powell’s speech scheduled for Friday, the gold market is poised for potential record highs in the near future.
Gold Price Awaits US PMI Data for Fresh Buying Boost
Aside from profit-taking, the gold price is facing pressure from a strengthening US Dollar, driven by rising US Treasury bond yields. The current market sentiment is influenced by concerns over the Chinese economy and geopolitical risks in the Middle East, leading to a negative shift in risk sentiment. Additionally, fears of a US recession linger as investors await the release of the S&P Global Manufacturing and Services PMI data and Powell’s upcoming speech.
The dovish tone of the Fed Minutes from the July policy meeting has put downward pressure on the US Dollar, boosting demand for non-interest-bearing assets like gold. This has helped gold price recover from losses and stabilize above $2,500. The potential for a rate cut at the September Fed meeting is now being priced into the market, further impacting the US Dollar’s performance.
Gold Price Technical Analysis: Daily Chart
The short-term technical outlook for the gold price remains positive, with a symmetrical triangle breakout and a bullish 14-day Relative Strength Index (RSI) indicating a ‘buy-the-dips’ opportunity. While the 14-day RSI has dipped slightly, it remains above 50, suggesting ongoing buying interest.
If a retracement occurs, immediate support is seen at $2,486, followed by the triangle resistance-turned-support at $2,467. On the upside, a breach of the record high at $2,532 could lead to a test of $2,550 and potentially $2,600. Further gains could target $2,660.
What Investors Should Watch Out For
Investors should pay attention to the upcoming US Preliminary PMI data and Fed Chair Jerome Powell’s speech, as these events could have a significant impact on the gold price and the broader financial markets. The dovish stance of the Fed, combined with global economic uncertainties and geopolitical tensions, are creating a favorable environment for gold as a safe-haven asset.
Overall, the current market conditions suggest that the gold price is poised for further gains, with potential record highs on the horizon. Investors looking to diversify their portfolios and protect against market volatility may find gold to be a valuable asset in the current economic landscape.