Gold prices have been consolidating since early July, hovering around the 50-period Exponential Moving Average (EMA) and rebounding near their all-time high. Technical analysis suggests a positive outlook, with prices above the EMA and momentum indicators showing bullish signals. If this trend continues, Gold could challenge its previous high of $2483.70 per troy ounce, with potential resistance levels at $2512.58 and $2549.55.
Gold's recent rise, driven by expectations of a Federal Reserve rate cut and geopolitical tensions, faces uncertainty as upcoming economic data, particularly the Consumer Price Index (CPI), could influence its direction.
Overview
Gold prices have been consolidating since early July, hovering around the 50-period Exponential Moving Average (EMA) and rebounding near their all-time high. Technical analysis suggests a positive outlook, with prices above the EMA and momentum indicators showing bullish signals. If this trend continues, Gold could challenge its previous high of $2483.70 per troy ounce, with potential resistance levels at $2512.58 and $2549.55.
Gold's recent rise, driven by expectations of a Federal Reserve rate cut and geopolitical tensions, faces uncertainty as upcoming economic data, particularly the Consumer Price Index (CPI), could influence its direction.
Key Economic Events
Wednesday 09:00 am (GMT+0) - Europe: Employment Change q/q (EUR)
Wednesday 09:00 am (GMT+0) - Europe: GDP q/q (EUR)
Wednesday 12:30 pm (GMT+0) - USA: CPI m/m (USD)
Wednesday 14:30 (GMT+0) - EIA Crude Oil Stocks Change (USD)
Wednesday 22:45 (GMT+0) - New Zealand: Electronic Card Retail Sales m/ (NZD)
Wednesday 23:50 (GMT+0) - Japan: GDP q/q (JPY)
Thursday 01:30 am (GMT+0) - Australia: Employment Change (AUD)
Thursday 06:00 am (GMT+0) - UK: Manufacturing Production m/m (GBP)
Thursday 12:30 pm (GMT+0) - USA: Core Retail Sales m/m (USD)
Friday 06:00 am (GMT+0) - UK: Retail Sales m/m (GBP)
Friday 12:30 pm (GMT+0) - USA: Building Permits (USD)
Technical Analysis
The Gold price has been moving sideways since early July, bouncing off the 50-period Exponential Moving Average (EMA) and rebounding from the all-time high area.
The upcoming economic data from today and throughout the rest of the week could influence the future direction of Gold. However, based on technical analysis, the outlook is positive. Gold prices are currently above the EMA, the Momentum oscillator shows values above the 100 baseline, and the Relative Strength Index is between 50 and 70 lines.
If the positive momentum continues, the bulls may drive the price higher to exceed the all-time high of $2483.70 per troy ounce.
Potential Upside Targets
If the bulls keep control of the market, traders may consider the following three potential upside targets:
2483.70: The first price target is 2483.70, which aligns with the all-time high reached on July 17.
2512.58: The second resistance level is determined at 2512.48, corresponding to (R2) resistance calculated using the weekly Pivot Points method.
2549.55: An additional price target is seen at 2549.55, representing the 161.8% Fibonacci Extension drawn from the swing high of 2477.67 to the swing low of 2364.29.
Potential Downside Targets
If the bears manage to take control of the market, traders may find potential opportunities in the following four downside targets:
2458.78: The initial downside target is expected to be 2458.78, which corresponds to an internal trendline marked on August 5 and 13, respectively.
2417.99: The second line of support is estimated at 2417.99, which aligns with the (PP) support calculated by using the weekly Pivot Points method.
2377.19: The third support is determined at 2377.19, representing the 61.8% Fibonacci Retracement between the swing low of 2286.75 and the swing high of 2483.70.
2353.10: An additional support level is identified at 2353.10, corresponding to the trough of corrective swing marked on July 25.
Fundamentals
The price of Gold has risen by approximately 33% since the start of 2023 and by over 20% so far this year. This recent increase has been attributed to expectations that the US Federal Reserve may start lowering interest rates in September, along with growing geopolitical tensions that have boosted demand for this safe-haven asset.
Yesterday's release of the US PPI data, which came in at 0.1%, showed a slightly lower reading than the previous month, indicating a modest cooling in inflationary pressures, which paused the rise of Gold at least temporarily.
According to Bloomberg, Fed Governor Michelle Bowman said Saturday that she still sees upside risks for inflation and continued strength in the labor market, signaling she may not be ready to support a rate cut in September. Higher borrowing costs are typically negative for Gold, as it doesn't yield any interest.
However, the highly anticipated CPI data later today is expected to provide insight into the direction of the yellow precious metal.
Conclusion
Gold's price has been consolidating, supported by technical indicators pointing to a positive outlook. While the potential for further gains exists, with key resistance levels at $2483.70 and beyond, the upcoming economic data, particularly the CPI report, will be crucial in determining its next move. Traders should remain cautious as the market balances bullish momentum and impacts of evolving economic conditions.