Gold (XAU/USD) Struggles at $2405 Amid Dollar Strength and Trump Assassination Attempt
Gold (XAU/USD) kicked off the week on a down note, trading around $2405 after reaching a low of the same value earlier.
This downturn is primarily linked to the strengthening of the US dollar, which rose despite growing expectations of Federal Reserve interest rate cuts in September.
The dollar’s rise was further fueled by safe-haven demands after the attempted assassination of former President Donald Trump, which added pressure to gold prices. Conversely, slower economic growth and subdued retail sales in China may buffer some of gold’s declines, as investors typically flock to gold during times of economic uncertainty.
Analyzing the Dollar’s Influence on Gold
Despite predictions of imminent Federal Reserve rate reductions, the US dollar has shown unexpected resilience. Currently, market indicators suggest a greater than 90% likelihood of a rate decrease in September, following a subdued US consumer inflation report. Moreover, recent data from the US Bureau of Labor Statistics indicates a 2.6% increase in the Producer Price Index (PPI) for June, surpassing the forecasted 2.3%. “As the dollar strengthens, gold often faces downward pressure, yet the expected rate cuts provide a counterbalance,” explains an economist from ING.
Geopolitical and Economic Conditions Impacting Gold
The political climate in the US, marked by the recent security threat against Donald Trump, along with economic hurdles in China, cast a favorable light on gold for mid-2024. China reported a GDP growth of 4.7% in Q2 2024, a decline from 5.3% in Q1, with retail sales growing only 2.0% year-over-year in June, below the expected 3.1%. Fixed asset investment also expanded by just 3.9%, under the 4.0% anticipated. These factors collectively enhance gold’s appeal as a safe haven amidst global instability.
Short-Term Outlook and Technical Analysis
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