Will Gold Prices Surge to $2,380 with Upcoming US Economic Data?

Gold (XAU/USD) rebounded from its previous decline, rising from $2,370.15 to an intraday high of $2,379.35. This increase was primarily driven by a weaker US dollar, spurred by expectations that the Federal Reserve might initiate a rate-cut cycle in September.

The US Dollar (USD) fell short of its two-week high earlier in the week, enhancing gold’s appeal to investors. However, stronger-than-expected US GDP growth and lower inflation in Q2 2024 suggest a robust economy, potentially reducing gold’s allure as a safe-haven asset and limiting its gains.

Impact of US Economic Data and Federal Reserve Expectations on Gold

The US dollar struggled for momentum, turning bearish amid anticipated rate cuts by the Federal Reserve. Markets have priced in a rate cut for September, expecting two more reductions by year-end, which has pressured the USD and supported gold prices.

Despite this, strong US economic data, including a 2.8% GDP growth and a drop in unemployment claims, limit the USD’s losses. “The Federal Reserve’s expected rate cuts have kept the dollar on the defensive, providing support for gold prices,” noted a market analyst.

From April to June, the US economy expanded at a 2.8% annualized rate, up from 1.4% in the previous quarter, surpassing the anticipated 2% growth. The core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation measure, moderated to 2.9% from 3.7% in the prior quarter.

Additionally, unemployment insurance claims fell more than expected to 235,000 for the week ending July 20. These figures could weigh on gold prices, as stronger economic growth and lower inflation reduce gold’s appeal as a safe-haven asset.

Moreover, the drop in unemployment claims suggests a strong job market, which may lead to expectations of higher interest rates, further diminishing gold’s attractiveness.

Gold Technical Outlook

Gold (XAU/USD) is trading at $2,369.020, up by 0.30%. The 4-hour chart indicates key technical levels and indicators that suggest the metal’s future trajectory. The pivot point is positioned at $2,379.70, acting as a critical marker for potential market movements.

On the upside, immediate resistance is noted at $2,401.34, with further resistance at $2,421.78 and $2,451.44. These levels are crucial for any bullish momentum. Conversely, immediate support is seen at $2,357.25, followed by $2,339.62 and $2,319.18, pivotal for any downside movements.

The Relative Strength Index (RSI) stands at 33, indicating that gold is nearing oversold territory, which could imply a potential rebound or consolidation before any significant move.

The 50-day Exponential Moving Average (EMA) is positioned at $2,418.25, suggesting the current price is below this average, reinforcing bearish sentiment. This indicator often serves as a benchmark for medium-term trends and could act as resistance if the price attempts to rise.

In conclusion, the technical outlook for gold remains bearish below the $2,379.70 pivot point. Market participants should watch for key economic indicators that could influence gold’s trajectory.