Introduction to Gold Prices
The gold price has edged lower in Monday’s early European session, currently standing at around $3,350. This decrease is largely attributed to a stronger US Dollar. However, hopes of a September rate cut, following comments from Federal Reserve Chair Jerome Powell, may help limit the decline in gold prices. Powell’s remarks at the Jackson Hole symposium suggested that the US economy is facing challenges, with inflation risks tilted upwards and employment risks downwards.
Factors Influencing Gold Prices
Several factors are influencing gold prices at the moment. The possibility of a rate cut in September could boost gold prices, as lower interest rates reduce the opportunity cost of holding gold. Additionally, escalating tensions between Russia and Ukraine are contributing to the upside of gold. Ukrainian President Volodymyr Zelensky has stated that the country will continue to fight for its freedom, while Moscow has accused Ukraine of attacking Russian power and energy facilities.
Upcoming Economic Events
Gold traders are eagerly awaiting the preliminary reading of the US Gross Domestic Product (GDP) for the second quarter, which is scheduled to be released later on Thursday. The US economy is expected to grow at an annual rate of 3.0% in the second quarter. A stronger-than-expected outcome could boost the US Dollar and weigh on gold prices.
Market Movers
Recent comments from Fed officials have also impacted gold prices. St. Louis Fed President Alberto Musalem stated that he needs more data before deciding to support a rate cut at the September meeting, citing that inflation remains above the Fed’s 2% target. Boston Fed President Susan Collins noted that the overall economic fundamentals in the US are relatively solid but warned that the central bank does not rule out a larger and more persistent impact of tariffs on inflation.
Technical Analysis
From a technical perspective, gold retains a bullish tone in the longer term. The price is holding above the key 100-day Exponential Moving Average (EMA), and the 14-day Relative Strength Index (RSI) is hovering around the midline, suggesting neutral momentum in the near term. The key resistance level for gold emerges in the $3,400-3,410 zone, while the initial support level is located at $3,315.
Conclusion
In conclusion, gold prices are currently under pressure due to a stronger US Dollar but may be supported by hopes of a September rate cut and escalating tensions between Russia and Ukraine. The upcoming US GDP report and comments from Fed officials will be closely watched by gold traders. As the technical analysis suggests, gold retains a bullish tone in the longer term, but further consolidation cannot be ruled out in the near term. As the situation continues to unfold, it will be interesting to see how gold prices react to these various factors and events.
