Gold Price Drops in Early Asian Session Due to Stronger US GDP Growth
In Friday’s early Asian session, the price of gold (XAU/USD) is facing a downward trend as the US Dollar (USD) strengthens. The recent positive US growth report and decrease in Initial Jobless Claims have shifted expectations of a significant rate cut by the US Federal Reserve (Fed) in September. This has put pressure on gold, which does not yield interest. However, ongoing geopolitical tensions in the Middle East and the conflict between Russia and Ukraine could increase demand for safe-haven assets like gold.
Investors are eagerly awaiting the US Personal Consumption Expenditures (PCE) inflation data, which is scheduled to be released later on Friday. This data will provide insights into the potential size of the Fed rate cut. If the core PCE Price Index shows a lower-than-expected increase, it could prompt the Fed to implement rate cuts, which would benefit the price of gold.
Market Update: Gold Price Faces Pressure Despite Fed Rate Cut Expectations
- Russia conducted air attacks on Ukraine, resulting in significant costs. Ukraine is closely monitoring its border with Belarus following a troop buildup in the region.
- The US GDP grew at a rate of 3.0% in the second quarter, surpassing initial estimates.
- Weekly Initial Jobless Claims in the US declined, indicating a stable labor market.
- Atlanta Fed President suggests a potential rate cut, depending on upcoming economic reports.
- Market expectations suggest a 66% chance of a 25 basis points rate cut in September.
Technical Analysis: Gold Price Outlook Favorable for Bulls
Although the price of gold has decreased slightly, the overall outlook remains positive for bullish investors. The precious metal is currently trading below a key resistance level and the all-time high. However, it is holding above the 100-day Exponential Moving Average (EMA) on the daily timeframe, indicating strong bullish momentum. The Relative Strength Index (RSI) also suggests further upside potential in the near term.
Key resistance levels for gold are at $2,530 and $2,600, while initial support levels are at $2,500 and $2,432.
Gold FAQs
Gold has historically served as a store of value and a safe-haven asset during turbulent times. Central banks hold significant gold reserves to support their currencies. The price of gold is influenced by factors such as geopolitical instability, interest rates, and the strength of the US Dollar.