The price of gold has regained its momentum after dropping below $2,500 earlier this week, with technical indicators suggesting that sellers are staying on the sidelines. The upcoming highlight in the economic calendar is the August Consumer Price Index (CPI) data from the US, which could impact the next move in the precious metal.
Gold buyers hold strong at $2,500
Gold experienced some fluctuations at the beginning of the week due to thin trading conditions in the US markets. However, a decline in Wall Street’s main indexes on Tuesday led to a drop in the US Dollar (USD) and pushed XAU/USD below $2,500. The situation reversed on Wednesday as the USD weakened following the release of job opening data by the US Bureau of Labor Statistics, prompting Gold to reclaim the $2,500 level.
Positive news continued on Thursday with the ADP reporting a rise in private sector employment, further boosting Gold’s recovery. The benchmark 10-year US Treasury bond yield also declined, providing support for XAU/USD to move higher. Friday’s Nonfarm Payrolls data showed a lower-than-expected increase, leading to a drop in the bond yield and a steady performance for Gold heading into the weekend.
Gold outlook hinges on US inflation data
Investors are keeping an eye on China’s Trade Balance data and the US Consumer Price Index (CPI) data next week. A widening trade surplus in China could push Gold higher, while a strong CPI reading in the US might cause a reversal. The European Central Bank’s monetary policy decisions on Thursday could also influence the USD’s value, indirectly impacting Gold’s trajectory.
Assessing the current market positioning, there are signs of extreme levels in Gold markets, indicating potential turning points. Analysts warn of downside risks due to overextended positions and external factors that could affect Gold’s performance.
Technical analysis of Gold price
The near-term outlook for Gold remains bullish, with the Relative Strength Index (RSI) holding steady and the price trading within an ascending channel since March. Key support levels are at $2,500 and $2,440, while resistance levels are at $2,530 and $2,600.
Overall, the outlook for Gold is positive, but investors should remain cautious of upcoming economic data releases and market developments that could impact the price movement.