Today’s Gold Analysis Overview:
- Overall Gold Trend: Strongly bullish.
- Daily Support Levels: $3610 - $3560 - $3490 per ounce.
- Daily Resistance Levels: $3670 - $3690 - $3720 per ounce.
Today's Gold Trading Signals:
- Sell: Sell gold from the $3685 resistance level with a target of $3540 and a stop-loss at $3710.
- Buy: Buy gold from the $3570 support level with a target of $3680 and a stop-loss at $3540.
Technical Analysis of Gold Price (XAU/USD) Today:
Gold is currently trading at record levels, with its price being driven by bets on U.S. interest rate cuts. According to gold trading platforms, the gold price index reached a new historical high today of $3659 per ounce. The market is being supported by growing expectations that the Federal Reserve will continue to cut interest rates through the end of the year.
Recently, last Friday's unexpectedly weak US jobs report prompted financial markets to anticipate three US interest rate cuts this year, including a 25-basis point cut at next week's Federal Reserve meeting.
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Concurrently, investors are awaiting this week's U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) data for further guidance on the Fed's next moves. In addition to interest rate expectations, demand for gold as a safe haven is also being supported by uncertainty over U.S. tariffs and geopolitical risks.
Keep in mind that so far this year, the price of gold has risen 39%, driven by a weak US dollar, strong global central bank buying, accommodative monetary policies, and increasing global uncertainty. Lower interest rates typically enhance the appeal of non-interest-bearing bullion.
According to gold analysts' expectations, the bullish scenario for gold remains the strongest and most likely for current and future trading, at least until the release of US inflation figures and the Federal Reserve's announcement. Based on the performance on the daily chart above, technical indicators have reached a strong overbought level, as evidenced by the 14-day Relative Strength Index (RSI), which is stable around 79, breaking the 60 overbought line. At the same time, the MACD indicator is also overbought. This overbought level could be a good place to start selling for profit-taking if the US dollar rises again. Bulls are now looking towards the new all-time high of $3,700 per ounce if the market's gains continue.
Trading Tips:
Traders are advised to follow a strategy of buying gold on every price dip until further notice, but without taking on excessive risk.
U.S. Inflation Numbers Under the Microscope
According to the economic calendar, U.S. producer prices are set to be released. Last month's PPI data exceeded expectations, and the U.S. dollar rose as a result, so we should be on alert for a repeat performance mid-week. Consensus forecasts a reading of 0.3% on a month-over-month basis. Thursday's U.S. CPI inflation report is the week's main event for financial markets, with the headline inflation rate expected to be 2.9% year-over-year and core inflation at 3.1%.
While these figures are higher than what the Fed would typically target, strong evidence of a cooling U.S. labor market suggests that the Fed cannot be overly focused on inflation at the expense of the job market. The Fed is expected to look past near-term inflation strength, but if the data significantly exceeds expectations, the market will realize that the Fed is severely constrained by rising prices, which could worsen the situation by cutting interest rates.
Currently, the market views a 25-basis point rate cut in September as a foregone conclusion, but has begun to price in a higher probability of a 50-basis point cut following last week's weak nonfarm payrolls and JOLTS reports. After September, additional 50 basis point cuts are expected for the remainder of the year (two more cuts in 2025).
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