As the week begins, gold price continues to slide, reaching a six-day low below $2,500. The US Dollar is gaining momentum, contributing to the downward pressure on gold.
Key Factors Influencing Gold Price
The recent recovery of the US Dollar, following the release of US core PCE Price Index data, has impacted the gold market. The data showed a 2.6% YoY and 0.2% MoM increase in August, aligning with market expectations. This has led to speculation that the Fed may not implement as aggressive interest rate cuts as previously anticipated.
Market sentiment suggests a 67% chance of a 25 bps cut and a 33% chance of a 50 bps cut at the upcoming Fed policy meeting. This has kept downward pressure on gold prices, as traders also prepare for high-impact US economic data releases later in the week.
Technical Analysis of Gold Price
Despite indicators favoring an uptrend, gold price may see further correction. The RSI is pointing lower towards the 50 level, indicating weakness. Sellers are targeting the 21-day SMA at $2,475, with potential support at $2,463. Maintaining this support is crucial to sustain the uptrend. Failure to do so could lead to a downtrend towards $2,420.
If buyers manage to hold above $2,475, a rebound towards $2,500 is possible. Breaking above this level could test the previous high near $2,530.
Analysis
Gold price is facing downward pressure due to the strengthening US Dollar and speculation around Fed interest rate cuts. Traders are closely monitoring economic data releases and Fed policy decisions for further direction. Understanding these factors can help individuals make informed decisions regarding their investments in gold.