GOLD Analysis
Afternoon: Gold Rise Amid Economic Data Influencing Fed Rate Cut Speculation
Highlights:
- Gold climbed to $2,345 amid economic data challenging US economic resilience, suggesting potential Fed rate cuts.
- US GDP growth revised down to 1.3%, initial unemployment claims above average, and corporate earnings dropped unexpectedly.
- Upcoming data: German Retail Sales m/m, US Core CPI Flash Estimate y/y, CPI Flash Estimate y/y, and Core PCE Price Index m/m.
Introduction:
Gold prices have climbed higher to $2,345, reversing the previous session's dip. This movement aligns with a reprieve seen in US Treasuries as a wave of economic data challenged the resilience of the US economy, suggesting potential for Federal Reserve interest rate cuts.
Economic Indicators and Market Reactions
- US GDP Growth: New statistics revealed that US GDP expanded by 1.3% in the first quarter, which is lower than previously estimated. Additionally, the headline and PCE price indices were revised downward.
- Labor Market: Initial unemployment claims remained above this year's average, indicating a mild slowdown in the labor market.
- Corporate Earnings: Unexpected drops in corporate earnings further supported the notion of an economic slowdown.
- Market Sentiment: Despite markets believing that the Fed will only cut rates once this year, the recent economic data releases bolster the central bank's case for a potential rate cut in September
Upcoming Economic Data Releases
Key economic data scheduled for release includes:
- German Retail Sales m/m (Euro Zone)
- Core CPI Flash Estimate y/y (US Zone)
- CPI Flash Estimate y/y (US Zone)
- Core PCE Price Index m/m (US Zone)
Technical Analysis: Support and Resistance Levels
Gold prices are expected to find support at $2315 and face resistance at $2375. For Gold MCX, support is anticipated at 71700 and resistance at 72650.
Trading Strategy
Given the current market conditions, the recommended trading action is to:
Sell Gold from the $2342-$2344 range Target a price of $2325 Implement a stop loss above $2356
This strategy takes into account the recent rise in gold prices and the anticipation of potential Fed rate cuts influenced by economic data.
Conclusion
The gold market has shown an upward trend amid economic data that challenges the resilience of the US economy, supporting the case for possible Federal Reserve interest rate cuts. As investors digest the latest data, the outlook remains cautiously optimistic with a focus on upcoming economic releases. Investors should continue to monitor these developments and adjust their strategies accordingly.
Support and Resistance Levels:
