Gold Price Outlook: Potential Sellers Emerge as US Rate Cut Bets Rise
- Gold price attracts some sellers in Tuesday’s early Asian session.
- Rising bets of a US rate cut this year and escalating geopolitical conflicts might cap the Gold’s downside.
- Investors will watch the US CB’s Consumer Confidence and Housing Price Index data, which are due on Tuesday.
In the early Asian session on Tuesday, the Gold price (XAU/USD) is facing selling pressure as the US Dollar (USD) sees a modest recovery. However, signals from US Federal Reserve (Fed) Chair Jerome Powell at Jackson Hole hinting at potential interest rate cuts are expected to provide support to the precious metal. Lower interest rates tend to benefit gold as they reduce the opportunity cost of holding non-interest-paying assets. Additionally, the escalating geopolitical tensions in the Middle East could further boost Gold, a traditional safe-haven asset.
The People’s Bank of China (PBOC) refrained from purchasing gold in July for the third consecutive month. Traders are closely monitoring the August data for fresh market direction. Concerns about China’s sluggish economy and demand for precious metals could potentially impact the gold price, as China is a major producer and consumer of gold globally.
Key economic data releases on Tuesday include the US Conference Board’s Consumer Confidence for August and Housing Price Index for June. Later in the week, focus will shift to the preliminary US Gross Domestic Product (GDP) Annualized for the second quarter and Personal Consumption Expenditures (PCE) – Price Index data.
Daily Market Update: Gold Price Pressure Eases, Limited Downside Seen
- Hamas rejects Israeli conditions in ceasefire talks, seeking adherence to a proposal by US President Biden and the UN Security Council.
- Fed Bank of San Francisco President Mary Daly advocates for interest rate cuts to support the economy.
- Richmond Fed President Thomas Barkin adopts a cautious approach to rate cuts.
- Fed Chair Powell signals readiness for policy adjustments and expresses confidence in inflation reaching the Fed’s target.
- US Durable Goods Orders show significant improvement in July, exceeding expectations.
- Markets fully price in a 25 basis points rate cut, with lower chances of a deeper cut.
Technical Analysis: Gold Price Trends and Key Levels
Despite a slight decline, the Gold price remains within a bullish pattern, supported by the 100-day Exponential Moving Average (EMA). The Relative Strength Index (RSI) indicates ongoing strength, with potential resistance near the $2,530-$2,540 zone. A breakthrough could lead to a rally towards the $2,600 level. Conversely, a drop below $2,470 may trigger further selling pressure towards $2,432 and the critical support at $2,360-$2,370.
US Dollar Performance Against Major Currencies
The US Dollar (USD) weakened against the Euro (EUR) and British Pound (GBP) but gained against the Canadian Dollar (CAD) this week. The table below illustrates the percentage changes in USD value against major currencies:
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.19% | 0.15% | -0.22% | 0.21% | 0.17% | 0.24% | -0.10% | |
| EUR | -0.20% | -0.05% | -0.42% | 0.01% | -0.02% | 0.05% | -0.29% | |
| GBP | -0.15% | 0.03% | -0.37% | 0.05% | 0.02% | 0.11% | -0.25% | |
| CAD | 0.22% | 0.41% | 0.38% | 0.42% | 0.43% | 0.47% | 0.12% | |
| AUD | -0.19% | 0.00% | -0.05% | -0.43% | -0.02% | 0.05% | -0.28% | |
| JPY | -0.18% | 0.02% | -0.04% | -0.43% | 0.00% | 0.02% | -9927.67% | |
| NZD | -0.24% | -0.07% | -0.09% | -0.47% | -0.04% | -0.07% | -0.35% | |
| CHF | 0.08% | 0.29% | 0.25% | -0.12% | 0.31% | 0.28% | 0.35% |
Gold FAQs
Why is Gold considered a safe-haven asset?
Gold has historically been valued as a safe-haven asset due to its role as a store of value and medium of exchange. It is often sought after during times of economic uncertainty and is seen as a hedge against inflation and depreciating currencies.
Who are the biggest holders of Gold?
Central banks are the largest holders of Gold, using it to diversify reserves and strengthen their economies. In 2022, central banks added a record amount of Gold to their reserves, with emerging economies like China, India, and Turkey boosting their holdings.
What factors influence the price of Gold?
Gold prices can be influenced by various factors, including geopolitical tensions, economic instability, and changes in interest rates. The price of Gold also has an inverse correlation with the US Dollar and other safe-haven assets.
How can individuals benefit from Gold investment?
Investors can benefit from Gold investment as a diversification strategy, a hedge against inflation, and a safe-haven asset during turbulent times. Understanding the factors that impact Gold prices can help individuals make informed investment decisions.