Gold Price Finds Support Amid Economic Concerns and Central Bank Events
GOLD price rebounds during the Asian session on Tuesday, breaking a four-day losing streak and recovering from a one-week low reached the day before. Currently trading around $1,960, the XAU/USD has gained 0.25% for the day, as traders eagerly await major central bank events scheduled for this week.
Factors Boosting Safe-Haven Appeal for Gold
Several factors contribute to the rise in safe-haven demand for GOLD . Recession risks, escalating tensions between the US and China – the world’s largest economies – and geopolitical uncertainties have subdued market optimism. Fears of a global economic slowdown intensified after disappointing Purchasing Managers’ Index (PMI) readings for July in the Euro Zone, the United Kingdom, and the United States. This economic backdrop is bolstering the safe-haven status of GOLD .
Modest USD Decline Supports XAU/USD
A modest pullback in the US Dollar from its recent two-week high is also providing support for the XAU/USD. However, the downside for the USD appears limited as market focus shifts to the Federal Open Market Committee (FOMC) policy meeting, commencing on Tuesday. The Federal Reserve is expected to announce a 25 basis points interest rate hike on Wednesday, and investors will closely watch the accompanying monetary policy statement and Fed Chair Jerome Powell’s remarks during the press conference.
Central Banks and Key US Macro Data in Focus
Investors are closely monitoring central bank decisions for cues on future rate-hike paths, which will influence the USD’s price dynamics and impact the Gold price. The FOMC’s commitment to a dovish or hawkish policy stance remains uncertain, affecting the USD’s recovery from its lowest level since April 2022. Important US macro data releases, such as the Advance Q2 GDP report and the Core PCE Price Index, are also part of this week’s busy schedule. Additionally, the European Central Bank (ECB) meeting and the Bank of Japan (BoJ) monetary policy update will further shape the near-term trajectory for non-yielding Gold.
Technical Outlook for Gold Price
On the technical front, the Gold price faces resistance near the 100-day Simple Moving Average (SMA) at around $1,962, followed by the $1,977-$1,978 zone. A breakthrough above the monthly peak at $1,987-$1,988 would pave the way for a potential reclaim of the $2,000 psychological level. Further upward momentum could target the $2,010-$2,012 supply zone.
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