The Gold price (XAU/USD) continues to fall below the $2,500 mark in Monday’s Asian session. The recent strength of the US Dollar following the release of the US July’s Personal Consumption Expenditures (PCE) Index has put pressure on the precious metal. Additionally, concerns about China’s sluggish economy, a major Gold buyer, are contributing to the downward trend.

Despite these factors, there is speculation of a potential interest rate cut by the US Federal Reserve (Fed) at its September meeting, which could limit Gold’s losses. Lower interest rates would reduce the opportunity cost of holding non-yielding gold. Traders are now turning their attention to key US economic data, including the ISM Manufacturing PMI, Services PMI, and the employment report later in the week.

Market Update: Gold Price Retreats After US PCE Inflation Report

  • Protests erupt in Israel after the recovery of hostages killed by Hamas in Gaza, leading to a labor strike and economic disruptions.
  • Chinese NBS Manufacturing PMI declines in August, while Non-Manufacturing PMI shows improvement.
  • US PCE Price Index data for July falls slightly below market expectations, indicating subdued inflation.
  • Fed rate cut expectations for September are at 70%, with a possibility of a 50 bps reduction.

Technical Analysis: Gold Price Outlook

Despite the current decline, the Gold price maintains a bullish outlook on the daily chart. The price remains above the key 100-day Exponential Moving Average (EMA), with the RSI indicator signaling upward momentum. Resistance levels at $2,530-$2,540 could challenge further gains, while a breakout could target $2,600.

On the downside, initial support is at $2,470, followed by $2,432 and $2,372. Monitoring these levels can provide insights into potential price movements.

US Dollar Performance Against Major Currencies

The US Dollar has shown mixed performance against other major currencies today. The table below illustrates the percentage change of USD against key currencies, with notable movements against the New Zealand Dollar and Japanese Yen.

Understanding the dynamics of the US Dollar against global currencies can offer valuable insights for traders and investors navigating the forex market.

Fed FAQs: Understanding US Monetary Policy

  • Monetary policy in the US is guided by the Federal Reserve (Fed) to maintain price stability and promote full employment.
  • The Fed conducts regular policy meetings to assess economic conditions and make decisions on interest rates.
  • In times of crisis, the Fed may implement measures like Quantitative Easing (QE) to stimulate the economy, impacting the value of the US Dollar.
  • Quantitative Tightening (QT) is the reversal of QE, aimed at reducing the Fed’s balance sheet and potentially strengthening the US Dollar.

Staying informed about the Fed’s actions and their implications on the US Dollar can help individuals make informed financial decisions and navigate market volatility effectively.

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