Gold price rises above $2,400 amid firm US yields

A four-day losing skid for the gold price is ended as it rises beyond $2,400 despite declining US Treasury yields.
Trades are waiting on important economic statistics, including as Q2 GDP and June’s inflation, to determine the Fed’s next course of action.
The reduction of import taxes on gold and silver by India increases retail demand and sustains bullion prices.

Midway through the North American session, the price of gold bounced back thanks to a decrease in US Treasury bond yields. Due to this, the US dollar declined during the week’s packed economic schedule, which will include important data. At $2,404, the XAU/USD trades up 0.33%.

As market participants take in the US political happenings from the previous weekend, Wall Street is up for the second day in a row. The preliminary GDP number for the second quarter of 2024 and the release of June’s inflation statistics are of interest to market participants.

According to a Reuters poll, non-yielding metals are capping a four-day losing run as investors await the Fed’s first interest rate cut. According to the study, 73 out of 100 economists anticipate Powell and Co. to loosen policy by 50 basis points (bps) in 2024; 13 anticipate a reduction of 25 bps, and three anticipate no reduction at all.

According to the CME FedWatch Tool, traders predict the first 25 basis point rate cut will occur in September, with a 96% chance of success.

A positive development for the precious metal is the US 10-year Treasury note rate, which drops 1.5 basis points to 4.24% in the interim.

The final component that would allow Fed officials to start easing policy might be the Core Personal Consumption Expenditures (PCE) Price Index. “Anything weaker than expected (PCE data) would be a positive, mainly because it would convince the markets that the U.S. central bank is easing monetary policy in September,” according to sources cited by Reuters.

India’s reduction of import duties on gold and silver, which may increase retail demand, also helped bullion.

The US Dollar Index (DXY), which measures the value of the dollar relative to six other currencies, is expected to rise by 0.17% to 104.45. This prevented gold prices from moving beyond $2,400 even if they were up.

Market movers for the day: Gold price reclaims the $2,400 mark
The release of important economic data, such as June’s Core PCE, the preliminary Q2 GDP estimate, and Durable Goods Orders, is of great interest to gold traders.
MoM increases in orders for durable goods are anticipated to rise from 0.1% to 0.4%.
According to projections, the GDP for Q2 of 2024 would increase from 1.4% in Q1 to 1.9% QoQ, a sign that the economy is growing faster as the year goes on.
The Core PCE, the Fed’s favored inflation gauge, is predicted to decrease year over year (YoY) from 2.6% to 2.5%.

Recent statistics from the Consumer Price Index (CPI) indicated that the US was continuing its path of disinflation, which raised the price of gold and raised the possibility that the Fed might lower interest rates beginning in September.
The Fed is expected to loosen policy by 50 basis points (bps) at the end of the year, up from 48 bps one day earlier, according to the December 2024 fed funds rate futures contract.

Technical analysis: The price of gold is limited inside the trading range for Monday.
The gold market appears to have broken its losing skid, creating a two-candle pattern known as a “bullish harami,” which suggests the uptrend may continue in the near future.

The optimistic Relative Strength Index (RSI) suggests that buyers are gaining traction, which may lead to higher prices.

For a bullish continuation, XAU/USD must break over Monday’s high of $2,412. After being overcome, $2,450 would act as resistance before the all-time high of $2,483 would be faced. That would bring us to the $2,500 figure.

If, on the other hand, XAU/USD breaks below the low of $2,384 on July 22, a more significant correction is likely. The 50-day Simple Moving Average (SMA) around $2,359 would be the next level of support. Sellers see more losses after breaking above the 100-day SMA at $2,315 before dropping toward $2,300.