Gold Prices Hover Near $2,446 Amid Market Turmoil and Fed Signals
Gold prices (XAU/USD) have been volatile recently, with prices hovering around $2,445.795. Despite positive factors, the precious metal has struggled to maintain an upward trend, reaching an intra-day low of $2,437.
This downward pressure results from a risk-on market sentiment, which typically reduces the allure of safe-haven assets like gold.
Conversely, the Federal Reserve’s dovish stance has led to a decrease in U.S. bond yields and a weaker U.S. dollar, which could help limit gold’s losses.
Geopolitical tensions in the Middle East have also bolstered gold prices as investors seek stability amid uncertainty.
Bullish Factors for Gold
The outlook for gold remains bullish in the near term, primarily due to the Federal Reserve’s potential interest rate cuts and weak job growth data.
The Fed has maintained interest rates at 5.25%-5.50% but hinted at possible rate cuts if inflation remains under control.
“The recent ADP report showed a mere 122,000 increase in U.S. private sector jobs for July, well below expectations,” said Fed Chair Jerome Powell.
Annual wage growth of 4.8% also indicates weaker job growth, adding pressure on the Fed to consider easing monetary policy.
Lower U.S. Treasury yields and a weakened dollar increase gold’s appeal, making it an attractive investment as investors anticipate a possible rate cut in September.
Technical Outlook and Support Levels
On the technical front, gold is poised for potential volatility. The 4-hour chart shows gold trading just below a pivotal resistance level of $2,450.64.
If gold manages to break through this resistance, it could attract momentum buyers and push prices toward the next resistance levels at $2,467.87, $2,483.50, and $2,503.94.
However, the Relative Strength Index (RSI) at 71 suggests that gold is approaching overbought territory, which could trigger a corrective pullback.
Immediate support for gold is seen at $2,426.59, with additional support at $2,404.15 and $2,380.90.
Should prices dip, these levels could provide buying opportunities for traders. The 50-day Exponential Moving Average (EMA) at $2,399.53 further supports a bullish outlook, as prices remain above this moving average.