Most recent article: Gold price dips as traders brace for US GDP data
- Gold price rebounds above $2,500 in Thursday’s Asian session.
- Rising Fed rate cut expectations and ongoing conflicts in the Middle East underpin the yellow metal.
- A firmer US Dollar might limit Gold’s upside.
Gold price (XAU/USD) recovers some lost ground on Thursday after bouncing off the weekly lows in the sub-$2,500 region per troy ounce. The expectation of US interest rate cuts might lift the Gold demand as lower interest rates reduce the opportunity cost of holding non-yielding gold. Additionally, the current political uncertainty in the US, geopolitical tensions in the Middle East and global economic concerns contribute to the precious metal’s upside.
On the other hand, the renewed US Dollar (USD) demand could weigh on the USD-denominated Gold price as it makes gold more expensive for most buyers. Investors will closely monitor the second estimate of the US Gross Domestic Product for the second quarter (Q2) on Thursday for more cues about the size and pace of the Federal Reserve (Fed) rate cut. On Friday, the US Personal Consumption Expenditures (PCE) Price Index data for July will take center stage.
Daily Digest Market Movers: Gold price remains strong amid rising rate cut bets
- Demand for gold will continue to be driven by emerging markets, particularly China, India, and Turkey, noted John Reade, Chief Market Strategist at the World Gold Council.
- “US data has failed to give gold any further lift, so the temptation for traders to book some profit after a long run has been rising,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S.
- The US Gross Domestic Product (GDP) growth number for Q2 in the second estimate is expected to grow 2.8%.
- The headline Personal Consumption Expenditures (PCE) Price Index is expected to show an increase of 2.6% YoY in July, compared to 2.5% in June. The core PCE inflation is projected to rise from 2.6% to 2.7% YoY.
- The rate futures markets have fully priced in a 25 basis points (bps) rate cut in September, while the possibility of a deeper rate cut stands at 36.5%, according to the CME FedWatch Tool. Traders see 100 bps Fed easing this year.
Technical Analysis: Gold price offers a bullish outlook in the longer term
The Gold price trades in positive territory on the day. The precious metal remains stuck under a five-month-old ascending channel upper boundary and the all-time high. However, the overall picture is bullish, with the price well above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The upward momentum is confirmed by the 14-day Relative Strength Index (RSI) position above the midline near 61.00, indicating that there is potential for further upside.
The confluence of the all-time high and the upper boundary of the trend channel in the $2,530-$2,535 zone acts as the crucial upside barrier for the yellow metal. Extended gains could see a rally to the $2,600 psychological mark.
The immediate support level for XAU/USD is located at the $2,500 round figure. A decisive break below this level could lead to a significant sell-off towards $2,432, the low of August 15. The next contention level is seen at $2,367, the 100-day EMA.
US Dollar price in the last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the weakest against the New Zealand Dollar.
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | 0.20% | -0.85% | -0.85% | -0.64% | -0.46% | -1.89% | -1.19% | |
EUR | -0.20% | -1.08% | -1.04% | -0.84% | -0.66% | -2.10% | -1.40% | |
GBP | 0.84% | 1.03% | 0.02% | 0.22% | 0.40% | -1.03% | -0.32% | |
CAD | 0.84% | 1.04% | -0.01% | 0.21% | 0.46% | -1.04% | -0.34% | |
AUD | 0.64% | 0.84% | -0.21% | -0.20% | 0.19% | -1.24% | -0.55% | |
JPY | 0.45% | 0.66% | -0.40% | -0.42% | -0.18% | -1.47% | -9973.87% | |
NZD | 1.86% | 2.06% | 1.02% | 1.03% | 1.24% | 1.42% | 0.69% | |
CHF | 1.18% | 1.38% | 0.33% | 0.34% | 0.54% | 0.76% | -0.70% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
![AUD/USD regains 0.6800 as risk sentiment improves](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/AUDUSD/australian-currency-18259170_XtraSmall.jpg)
AUD/USD regains 0.6800 as risk sentiment improves
AUD/USD extends its recovery mode above 0.6800 in Asian trading on Thursday, despite the unexpected slide in the Australian Q2 Private Capex data. Improving risk appetite and a broad US Dollar weakness aid the pair's renewed upside. US data is next in focus.
![USD/JPY approaches 145.00 on renewed upside, US data eyed](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/USDJPY/japanese-yens-7972406_XtraSmall.jpg)
USD/JPY approaches 145.00 on renewed upside, US data eyed
USD/JPY continues to march higher toward 145.00 in the Asian session on Thursday. The pair adds gains as risk sentiment recovers following Nvidia's earnings-led gloom. USD/JPY stands resilient to a weaker US Dollar ahead of top-tier US economic data.
![Gold price gains ground as traders await US GDP data](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/gold-nuggets-7636265_XtraSmall.jpg)
Gold price gains ground as traders await US GDP data
Gold price recovers some lost ground on Thursday after bouncing off the weekly lows in the sub-$2,500 region per ounce troy. The expectation of US interest rate cuts might lift the Gold demand as lower interest rates reduce the opportunity cost of holding non-yielding gold.
![WazirX files for moratorium application in Singapore Court](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/cryptocurrenciesusd_XtraSmall.jpg)
WazirX files for moratorium application in Singapore Court
WazirX, an Indian cryptocurrency exchange, announced that a moratorium had been filed in Singapore’s High Court under the Insolvency, Restructuring and Dissolution act to address users’ crypto balances.
![Three fundamentals for the week: Focus on the fragility of the US economy](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/NFP/american-dollar-bills-on-a-stars-and-stripes-flag-28691402_XtraSmall.jpg)
Three fundamentals for the week: Focus on the fragility of the US economy Premium
US Consumer confidence data will provide a gauge of how consumers are feeling. Jobless claims are in focus after Fed Chair Powell's dovish speech. Investors will look to the core PCE index to confirm that inflation is falling.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.