Gold (XAU/USD) Price Near $2,300 Amid Fed’s Hawkish Stance and Key Data Releases

Gold prices (XAU/USD) have been struggling to recover from a nearly two-week low, hovering around the $2,300 mark during the Asian session on Thursday.

GOLD Price Chart - Source: Tradingview

The Federal Reserve’s (Fed) more hawkish stance, revealed at the end of the June meeting, continues to weigh heavily on the non-yielding yellow metal. Fed policymakers are favoring only one interest rate cut by the end of this year, which supports elevated US Treasury bond yields and poses a significant headwind for gold.

Despite signs of easing inflationary pressures in the US, bets for a September interest rate cut by the Fed remain in play. However, these expectations haven’t significantly helped the US Dollar (USD) capitalize on its strong move to a nearly two-month peak the previous day. The softer tone around equity markets, coupled with persistent geopolitical tensions and political uncertainty, provides some support for the safe-haven gold price. Traders are cautious ahead of key US macro data, particularly the US Personal Consumption Expenditures (PCE) Price Index due on Friday.

Impact of US Economic Indicators

The Federal Reserve’s narrative of higher-for-longer interest rates continues to bolster US Treasury bond yields and the bullish US Dollar, which undermines the non-yielding gold price. On Wednesday, a government report revealed that New Home Sales experienced the steepest decline since September 2022, plunging 11.3% in May to 619K, the lowest level since November. Despite this, USD bulls remained unfazed, highlighting the market’s confidence in the Fed’s stance.

“The USD bulls are holding strong despite the slowing economy and easing inflationary pressures,” noted a market analyst.

The Fed’s projection of only one rate cut in 2024 contrasts with market pricing, which anticipates a greater likelihood of a rate cut in September and two 25 basis point cuts by year-end. This uncertainty over the timing and number of Fed rate cuts this year limits further USD appreciation and lends support to XAU/USD amid ongoing geopolitical tensions.

Looking Ahead: Key Data Releases

As traders brace for the upcoming US presidential debate and the release of the PCE Price Index on Friday, Thursday’s US macro data – including the final Q1 GDP print, Durable Goods Orders, Initial Weekly Jobless Claims, and Pending Home Sales – could provide some impetus for gold prices.

In conclusion, while the Fed’s hawkish stance and robust US Treasury yields challenge gold’s recovery, easing inflationary pressures and geopolitical uncertainties offer some support. The market remains focused on upcoming economic data to gauge the potential direction of gold prices.

Gold Price Chart – Technical Outlook

The 4-hour chart for gold shows a pivot point at $2296.84, indicating a crucial level for determining market direction. Immediate resistance levels are at $2307.04, $2315.85, and $2327.57, suggesting potential upward targets if the price breaks above the pivot.

GOLD Price Chart

On the downside, immediate support is positioned at $2290.17, with further support at $2283.97 and $2277.51. The RSI stands at 32, indicating oversold conditions which may lead to a rebound. The 50-day EMA is at $2319.20, suggesting a resistance level close to the current price.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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