Gold Prices Rebound on Weakening US Dollar, Investors Eye Key US Data
Gold prices (XAU/USD) edged higher on Tuesday, recovering from two-week lows of $2,325. The precious metal’s uptick is supported by a softer US Dollar (USD) and safe-haven flows amid ongoing geopolitical tensions in the Middle East. However, rising short-term Treasury yields, following hawkish Federal Reserve minutes and strong US economic data, are likely to bolster the Greenback in the near term. As a result, traders might adopt a cautious stance ahead of key US inflation data expected later this week.
On Tuesday, the US Conference Board’s Consumer Confidence data is set to be released, along with speeches from Federal Reserve officials Neel Kashkari, Mary Daly, and Lisa Cook. The US Core Personal Consumption Expenditures Price Index (Core PCE) will be in the spotlight on Friday. Further hawkish remarks from Fed officials or indications of persistent inflation could dampen expectations for an imminent Fed rate cut, potentially strengthening the USD and exerting downward pressure on the USD-denominated gold price.
Market Movers: Gold Remains Resilient Amid Fed’s Hawkish Stance and Strong US Data
An Israeli airstrike on a tent camp in Rafah, Gaza, resulted in 45 fatalities, officials reported on Monday. Global leaders are urging compliance with a World Court order to cease Israel’s attacks, according to Reuters.
Recent Federal Reserve meeting minutes revealed that achieving greater confidence in inflation moving towards the 2% target may take longer than previously anticipated. Consequently, traders have reduced the likelihood of a US Federal Reserve interest rate cut in September to 49%, down from 63% the previous week, as indicated by the CME FedWatch tool.
Preliminary estimates suggest that the US Gross Domestic Product (GDP) Annualized will grow by 1.4% in Q1, compared to a prior estimate of 1.6%. The US Core Personal Consumption Expenditures Price Index (Core PCE), the Fed’s preferred inflation gauge, is expected to rise by 0.3% month-over-month and 2.8% year-over-year in April.
UBS analysts have raised their gold price forecast to $2,600 by the end of 2024, while Citi experts project that gold could reach $3,000 per ounce within the next six to eighteen months.
Technical Analysis: Gold Price Maintains Long-Term Positive Outlook
Gold prices are trading positively for the day. According to the 1-hour chart, the precious metal remains bullish, holding above the key 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) is around the 50-midline, indicating a neutral position, which could suggest consolidation or lack of direction.
The upper boundary of the Bollinger Band at $2,430 serves as an immediate resistance level for XAU/USD. A sustained move above this level could attract buyers, pushing prices towards the all-time high of $2,450 and subsequently the psychological barrier of $2,500.
In a bearish scenario, the initial downside target is near the $2,300 mark. A breach of this level could pull the yellow metal down to $2,268, followed by the 100-day EMA at $2,220.
