Today’s Gold Analysis Overview:
- The overall Gold Trend: Neutral.
- Today's Gold Support Levels: $3330 – $3280 – $3240 per ounce.
- Today's Gold Resistance Levels: $3370 – $3388 – $3420 per ounce.
Today's Gold Trading Signals:
- Sell gold from the resistance level of $3385, target $3290, and stop loss $3400.
- Buy gold from the support level of $3290, target $3380, and stop loss $3260.
Technical Analysis of Gold Price (XAU/USD) Today:
At the end of last week's trading, the gold price index saw a strong rebound, surpassing its losses from the beginning of the week and heading towards a major resistance level at $3,400 per ounce. Weak US jobs data fueled hopes of a Federal Reserve interest rate cut in September. The immediate gold price bounced up from the support level of $3268 per ounce, the lowest price for the week, with gains reaching the resistance level of $3369 per ounce at the start of the new week's trading.
Technically: Based on the daily timeframe chart, the recent gains in gold prices have brought the overall performance back to a neutral stance. As I mentioned before in gold analysts' forecasts, the upward path would become stronger if prices stabilize around and above the $3300 per ounce resistance, which would support the bulls in pushing higher again. Gold prices ended last week with gains of 0.7%, driven by a collapsing US dollar. Gold bulls are watching for an opportunity to return to the vicinity of the $3400 per ounce resistance in preparation for stronger upward breakouts.
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According to performance on gold trading companies' platforms, gold experienced significant selling pressure last Wednesday after the Federal Reserve kept US interest rates unchanged, and Chairman Jerome Powell created uncertainty about a potential rate cut in September. Powell stated during the press conference following the US central bank's decision: "We have not made any decisions about September."
Any doubts about a September rate cut were, however, dispelled after the troubling US labor market data. According to the Bureau of Labor Statistics, the economy added only 73,000 jobs last month. Additionally, the total job growth for May and June was sharply revised down by 258,000 jobs. Based on the revised data, only 14,000 jobs were created in June and 19,000 in May. According to trusted trading experts, this weaker-than-expected US jobs report undermines confidence in the US economy and puts pressure on the dollar amidst market expectations of a more accommodative policy from the Fed, which may be inclined to cut interest rates to stimulate growth. As for gold trading, the disappointing labor data enhances its role as a hedge against economic uncertainty, supporting price gains as investors seek stability.
The movement of technical indicators confirms the neutral performance with an upward bias. The 14-day Relative Strength Index (RSI) is around a reading of 53, having crossed the midline, which supports the bulls. At the same time, the MACD indicator's movement is turning upwards, confirming that the gold bullion market is preparing for more gains if positive factors increase.
Trading Tips:
Traders are advised to buy gold bullion on every price decline and to not take risks, no matter how strong the entry levels, while carefully monitoring the factors that influence the market.
The Future of US Interest Rates and its Impact on Gold
In this regard, according to the CME FedWatch Tool, financial markets are now pricing in a roughly 92% probability of a US interest rate cut by the Federal Reserve in September. Last Thursday, the markets had only been expecting a 38% probability of a rate cut. According to analysts, the US Federal Reserve may ultimately regret its decision to keep interest rates unchanged earlier this week. Accordingly, September is the critical date for a US interest rate cut, and it could be a 50 basis points cut to make up for lost time.
The impact on gold trading is significant. Given the sharp shift in US interest rate expectations, there is potential for a strong rally in the gold price index to $3400 per ounce. At the same time, if the US Federal Reserve signals a dovish stance, speculative flows could push prices to surpass the $3400 per ounce level, a psychological barrier, especially as investors seek safe-haven assets amidst economic uncertainty.
Technical indicators, such as the upward trend in gold ETFs and rising open interest, support this potential rally. Overall, we believe that traders are already preparing for a fall rally, with some analysts pointing to seasonal patterns where the gold market often gains momentum after August. While volatility may still limit short-term gains, the overall trend appears optimistic, and the usual summer calm may have already ended.
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