Gold recovers despite Powell’s shyness to name his date

• 
  Powell
  makes
  signs
  that
  the
  Fed
  is
  weighing
  a
  rate
  cut
  but
  is
  too
  shy
  to
  name
  a
  date. 
• 
  The
  uncertainty
  dampens
  volatility
  for
  the
  interest-rate-sensitive
  precious
  metal. 
• 
  Gold
  edges
  higher
  as
  global
  central
  bank
  buying
  remains
  buoyant
  despite
  PBoC’s
  absence. 

Gold
(XAU/USD)
is
edging
higher
on
Wednesday,
continuing
to
recover
after
the
PBoC-related
sell-off
on
Monday. 

This
comes
after
data
emerged
showing
that
worldwide
central
bank
demand
for
Gold
remains
buoyant.
This
has
balanced
out
the
negative
impact
of
the
news
that
the
largest
consumer
of
Gold,
the
People’s
Bank
of
China
(PBoC),
stopped
buying
the
precious
metal
in
June
–
extending
its
parsimony
for
another
month
after
it
also
closed
its
wallet
in
May
–
following
an
18-month
buying
spree.

Gold
rises
despite
Powell’s
reluctance
to
name
a
date

Gold
shrugged
off

Federal
Reserve
(Fed)
Chairman
Jerome
Powell’s

testimony
to
the
Senate
Banking
Committee
on
Tuesday,
in
which
he
refused
to
give
a
date
for
a
first
interest-rate
cut,
saying
instead
that
the
Fed
would
adopt
a
data-dependent
approach
to
interest
rates. 

Investors
had
been
hoping
for
more
concrete
details
of
when
the
Fed
would
cut
interest
rates,
and
Powell’s
mute
retrenchment
ought
to
have
weakened
Gold
more
than
it
did.
The
reason
for
this
is
that
delays
in
cutting
rates
might
mean
borrowing
costs
stay
elevated
for
longer
–
a
negative
for
Gold
as
it
keeps
the
opportunity
cost
of
holding
the
precious
metal
high.
Gold
is
a
non-interest-bearing
asset,
which
becomes
less
attractive
to
investors
if
they
can
earn
higher
interest
elsewhere. 

At
the
same
time,
Powell
did
make
some
statements
that
acted
as
an
antidote.
For
example,
he
acknowledged
progress
had
been
made
on
inflation
and
discounted
the
possibility
of
rate
hikes.
He
also
said
there
was
a
balance
of
risks
to
waiting
too
long
(to
cut
interest
rates)
or
acting
too
soon,
suggesting
a
finely
balanced
situation. 

Gold
stays
bid
on
news
other
central
banks
are
buying

Gold
keeps
its
shine
on
Wednesday,
trading
in
the
$2,370s.
The
yellow
metal
finds
upside
momentum
after
it
emerged
that,
despite
the
PBoC
ceasing
to
increase
its
reserves,
other
major
central
banks
were
still
buying
substantial
amounts
of
Gold. 

“Other
central
banks
continue
to
participate,
with
India’s
central
bank
buying
more
than
nine
tons
of
Gold
in
June,
the
National
Bank
of
Poland
increasing
its
Gold
reserves
by
four
tons
and
the
Czech
National
Bank
showing
that
its
Gold
reserves
rose
by
some
two
tons
in
June.
With
these
central
banks
continuing
to
build
Gold
positions,
it
is
quite
evident
that
the
official
sector
is
much
broader
than
just
the
PBoC,”
said
Bert
Melek,
Head
of
Commodity
Strategy
at
TD
Securities. 

To
sum
up,
it
is
unlikely
China’s
absence
from
the
market
will
prevent
the
commodity
from
rising
to
TD’s
target
of
$2,475
in
Q1
of
2025,
according
to
TD’s
Malek.

Technical
Analysis:
Gold
continues
slow
recovery

Gold
is
recovering
for
the
second
day
in
a
row
after
it
formed
a
bearish
two-bar
reversal
pattern
(green-shaded
rectangle
in
the
chart
below)
at
the
top
of
the
early-July
move.
This
pattern
forms
after
a
long
green-up
day
is
followed
by
a
long
red-down
day
of
a
similar
length
and
size.
It
can
be
a
sign
of
a
short-term
reversal. 

XAU/USD
Daily
Chart

The
outlook
is
unclear.
There
is
a
risk
Gold
could
pull
back
to
the
50-day
Simple
Moving
Average
(SMA)
at
$2,343. 

That
said,
the
break
above
the
downward
trendline
on
June
27
turned
the
tables
for
the
precious
metal,
establishing
a
more
bullish

outlook. 

If
Gold
breaks
above
Friday’s
peak
of
$2,393,
it
will
continue
the
sequence
of
higher
highs
and
probably
unlock
the
next
target
at
the
$2,451
all-time
high. 

The
bearish
Head
&
Shoulders
(H&S)
topping
pattern
that
formed
from
April
to
June
has
been
invalidated
by
the
recent
recovery.
However,
there
is
still
a
chance
–
albeit
much
reduced
– that
a
more
complex
topping
pattern
may
have
formed
instead. 

If
a
complex
pattern
has
formed
in
place
of
the
H&S,
and
the
price
breaks
below
the
pattern’s
neckline
at
$2,279,
a
reversal
lower
may
still
be
possible
with
a
conservative
target
at
$2,171,
the
0.618
ratio
of
the
height
of
the
pattern
extrapolated
lower. 

The
trend
is
now
sideways
in
both
the
short
and
medium
term.
In
the
long
term,
Gold
remains
in
an
uptrend.