After a three-day downtrend, the gold price is taking a breather below the $2,500 mark in Asian trading. This pause comes ahead of the release of the crucial US Job Openings data, which could provide fresh cues on the Federal Reserve’s policy stance.
US Dollar Weakens Despite Risk-Aversion
Despite concerns over US-China tensions and risk-aversion in the market, the US Dollar remains weak alongside Treasury bond yields. This weakness, combined with bullish daily RSI indicators, suggests a potential rebound in the gold price.
The recent weak US Institute for Supply Management Manufacturing PMI data has raised fears of a ‘hard-landing’ for the US economy, leading to speculation of a 50 basis points interest-rate cut by the Federal Reserve in September.
Market expectations of aggressive policy easing by the Fed have increased, supporting the demand for gold as a safe-haven asset. Additionally, hopes for policy support measures from China could further boost the gold price.
Technical Analysis and Outlook
The short-term technical outlook for gold remains positive as long as it stays above the 21-day Simple Moving Average (SMA) at $2,485. The 14-day Relative Strength Index (RSI) indicates a potential upswing in the price.
To resume its upward trend, gold needs to surpass the $2,500 level and break through the record high of $2,532. On the downside, a drop below the 21-day SMA could lead to a test of the $2,462 support level.
The upcoming US Job Openings Survey data will be crucial in determining the size of the Fed’s rate cut in September, which will impact the US Dollar and gold prices.
Analysis and Conclusion
In conclusion, the gold price is currently consolidating below $2,500 as investors await key economic data and Fed policy decisions. The weak US Dollar and increasing expectations of a rate cut are supporting the demand for gold as a safe-haven asset.
Traders should keep an eye on the upcoming US Job Openings data to gauge the Fed’s future actions and the potential impact on gold prices. Overall, the current market conditions suggest a bullish outlook for gold in the near term.