- Gold price struggles to capitalize on the overnight sharp rise to a multi-day peak.
- Easing fears of an imminent US recession and the risk-on mood act as a headwind.
- Bets for a 50 bps Fed rate cut in September and geopolitical risks to offer support.
Gold price (XAU/USD) extends its steady intraday descent heading into the European session on Friday and drops to a fresh daily low, around the $2,418-$2,417 region in the last hour. The upbeat US labor market report released on Thursday, along with Friday’s better-than-expected Chinese inflation figures, boosted investors’ appetite for riskier assets. This is evident from a generally positive tone across the global equity markets and is seen as a key factor undermining demand for the safe-haven precious metal.
The downside for the Gold price, however, remains cushioned amid persistent geopolitical tensions stemming from the ongoing conflicts in the Middle East, which is likely to keep a lid on the market optimism. Meanwhile, rising bets for bigger interest rate cuts by the Federal Reserve (Fed) in September triggers a fresh leg down in the US Treasury bond yields. This, in turn, drags the US Dollar (USD) away from the weekly top touched on Thursday and should contribute to limiting further losses for the XAU/USD.
Daily Digest Market Movers: Gold price struggles to lure buyers amid risk-on mood, despite softer USD
- The markets have fully priced in a 25-basis points rate cut by the Federal Reserve in September and have been speculating on the possibility of a 50-bps rate cut, offering support to the Gold price.
- Adding to this, the assassination of Hamas chief Ismail Haniyeh in Tehran last week has raised the risk of retaliatory strikes by Iran on Israel and further benefited the safe-haven XAU/USD.
- The US data released on Thursday showed that there were 233K initial jobless claims in the week ending August 3 as compared to expectations for a 240K print and 249K in the previous week.
- The upbeat reading eased concerns about an economic downturn in the world’s largest economy, triggering a move higher in the US Treasury bond yields and lifting the US Dollar to the weekly top.
- Meanwhile, receding fears of a possible recession in the US boosted investors’ confidence and led to a strong relief rally in the US equity markets, which, in turn, capped gains for the precious metal.
- Traders, meanwhile, reacted little to the better-than-expected Chinese inflation figures, which showed that the headline CPI rose 0.5% over the year in July after reporting a 0.2% increase in June.
- This, however, was offset by the fact that China’s PPI extended a long stretch of declines witnessed since November 2022 and fell by the 0.8% YoY rate in July, at the same pace as seen in June.
Technical Analysis: Gold price technical setup supports prospects for the mergence of some dip-buying
From a technical perspective, the recent bounce from the 50-day Simple Moving Average (SMA) support and the subsequent move up favors bullish traders. Moreover, oscillators on the daily chart have again started gaining positive traction and suggest that the path of least resistance for the Gold price is to the upside. Hence, some follow-through strength towards the next relevant hurdle, near the $2,448-2,450 region, looks like a distinct possibility. The momentum could extend further towards challenging the all-time top near the $2,483-2,484 area touched in July. The latter is closely followed by the $2,500 psychological mark, which if cleared decisively will set the stage for a further near-term appreciating move.
On the flip side, the $2,412-2,410 horizontal resistance breakpoint now seems to protect the immediate downside ahead of the $2,400 round-figure mark. Any further decline might continue to attract dip-buyers and remain cushioned near the 50-day SMA support, currently pegged near the $2,372-2,371 region. This should act as a key pivotal point, below which the Gold price could aim to retest last week’s swing low, around the $2,353-2,352 area. Failure to defend the said support levels might shift the bias in favor of bearish traders and expose the 100-day SMA support, around the $2,342 zone.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.12% | -0.26% | -0.01% | -0.03% | -0.24% | -0.16% | |
| EUR | 0.03% | -0.06% | -0.19% | 0.02% | 0.00% | -0.21% | -0.13% | |
| GBP | 0.12% | 0.06% | -0.13% | 0.07% | 0.07% | -0.15% | -0.04% | |
| JPY | 0.26% | 0.19% | 0.13% | 0.19% | 0.21% | -0.02% | 0.09% | |
| CAD | 0.00% | -0.02% | -0.07% | -0.19% | -0.02% | -0.23% | -0.13% | |
| AUD | 0.03% | -0.00% | -0.07% | -0.21% | 0.02% | -0.21% | -0.11% | |
| NZD | 0.24% | 0.21% | 0.15% | 0.02% | 0.23% | 0.21% | 0.10% | |
| CHF | 0.16% | 0.13% | 0.04% | -0.09% | 0.13% | 0.11% | -0.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).