Gold price (XAU/USD) comes under some renewed selling pressure on the last day of the week and erodes a part of Thursday’s recovery move of over 1% from a two-week low. The US Dollar (USD) regains positive traction following Thursday’s softer US data-led decline and climbs to a nearly two-month peak amid a goodish pickup in the US Treasury bond yields, bolstered by the Federal Reserve’s (Fed) hawkish outlook. Apart from this, some repositioning trade ahead of the US inflation data provides an additional boost to the Greenback, which, in turn, is seen as undermining the commodity.Â
Investors, meanwhile, are still pricing in a greater chance that the Fe will start its rate-cutting cycle in September amid signs of easing inflationary pressures and a slowdown in the economic momentum. This, along with geopolitical tensions in the Middle East and the protracted Russia-Ukraine, acts as a tailwind for the safe-haven Gold price. Traders also seem reluctant to place aggressive directional bets and prefer to wait for more cues about the Fed’s policy path. Hence, the focus will remain glued to the release of the US Personal Consumption Expenditures (PCE) Price Index, due later during the North American session.
From a technical perspective, the overnight positive move stalled ahead of the 50-day Simple Moving Average (SMA) support breakpoint, now turned resistance. The said barrier is currently pegged near the $2,337-2,338 region, which should now act as a key pivotal point. A sustained strength beyond has the potential to lift the Gold price back towards the $2,360-2,365 supply zone. Some follow-through buying will negate any near-term negative bias and allow bulls to reclaim the $2,400 round-figure mark. The momentum could extend further towards challenging the all-time peak, around the $2,450 area touched in May.
On the flip side, the $2,300 round-figure mark is likely to protect the immediate downside ahead of the $2,285 horizontal support. A convincing break below the latter will be seen as a fresh trigger for bearish traders and drag the Gold price to the 100-day SMA, currently near the $2,250 area. The XAU/USD could eventually drop to the $2,225-2,220 region en route to the $2,200 round-figure mark.
The Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The YoY reading compares prices in the reference month to a year earlier. Price changes may cause consumers to switch from buying one good to another and the PCE Deflator can account for such substitutions. This makes it the preferred measure of inflation for the Federal Reserve. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Leave a Reply