Gold price holds steady above the $2,400 mark. The softer US Dollar and political uncertainty contribute to this trend. Investors are keenly observing these dynamics.
Factors Supporting Gold Price
Several factors are driving the gold price higher. Firstly, the dovish Federal Reserve (Fed) expectations play a significant role. US President Joe Biden’s exit from the presidential race has also impacted the market. Investors are now unwinding trades that bet on a Trump victory. Consequently, the US Dollar bulls are on the defensive, lending support to gold.
Geopolitical and Economic Concerns
Additionally, concerns about slowing Chinese economic growth are influencing gold prices. Geopolitical risks from the Russia-Ukraine war and Middle East conflicts further boost gold’s appeal as a safe-haven asset. However, gold lacks follow-through buying. Traders are awaiting the US Personal Consumption Expenditures (PCE) Price Index data. This data will provide cues about the Fed’s policy path and gold’s near-term trajectory.
US Political Uncertainty
The gold price snapped a three-day losing streak due to renewed US political uncertainty. US President Joe Biden’s exit prompted investors to reconsider their positions. Vice President Kamala Harris has now emerged as the leading Democratic candidate. Nonetheless, former President Donald Trump remains a favorite in the betting market.
Market Expectations and Technical Analysis
Market participants expect a September interest rate cut by the Federal Reserve. This expectation keeps the USD bulls defensive, supporting gold. Despite this, global equity markets’ bullish tone caps gold’s gains. Traders are looking forward to the PCE Price Index data and flash PMIs for more direction.
Technical Analysis
Technically, last week’s corrective slide stalled near the $2,390-2,385 support zone. This area coincides with the 50% retracement level of the June-July rally and the 100-period Simple Moving Average (SMA). A break below this zone could lead to deeper losses. Gold might then target the $2,366-2,365 region and potentially drop to the $2,300 mark.
Resistance Levels
On the upside, gold faces resistance around the $2,417-2,418 zone. A move beyond this could trigger bullish momentum. Gold could then target the $2,437-2,438 region and eventually challenge the all-time peak near the $2,482 area.
Conclusion
In summary, gold price remains robust above the $2,400 mark due to a weaker US Dollar and political uncertainty. Traders are closely monitoring upcoming economic data for further direction.
