GOLD Analysis
Afternoon: Gold Market Outlook: Rising Trend Amid Softer US Inflation Data
Highlights:
- Gold set to rise for the third week amid softer US inflation data; Fed rate cut expected in September.
- Support at $2,382 and resistance at $2,430; buy on dips strategy around $2,402.
- Key economic data: German WPI m/m, French Final CPI m/m, US Core PPI m/m, PPI m/m, Prelim UoM Consumer Sentiment.
Executive Summary
Gold prices are set to rise for the third consecutive week, buoyed by softer-than-expected US inflation data. Headline inflation fell to a one-year low of 3% in June, while the annual core inflation measure dropped to a three-year low of 3.3%. This deceleration in inflation has heightened expectations for a Federal Reserve rate cut, with traders now predicting a 93% chance of a rate decrease in September, up from 73% earlier this week. San Francisco Fed President Mary Daly anticipates further easing of pricing pressures and the labor market, justifying the rate cut, while Chicago Fed President Austan Goolsbee believes the US economy is on track to achieve 2% inflation.
Market Overview
The recent inflation data has provided a significant boost to gold prices, reinforcing market sentiment towards an imminent rate cut by the Federal Reserve. The decline in inflation suggests that the aggressive rate hikes over the past year have begun to take effect, easing pricing pressures and providing a more stable economic outlook. This has led to increased investor confidence in gold as a safe-haven asset amid potential economic shifts.
Key Economic Data to Watch
- US Core PPI m/m
- US PPI m/m
- US Preliminary UoM Consumer Sentiment
Technical Analysis
Gold prices are currently supported at $2,382 with resistance at $2,430. On the MCX, gold has support at ₹72,800 and resistance at ₹73,800. The technical outlook suggests a buy-on-dips strategy, targeting specific price levels for optimal entry and exit points.
Support and Resistance Levels
Gold ($)
- Support: $2,382
- Resistance: $2,430
Gold (MCX)
- Support: ₹72,800
- Resistance: ₹73,800
Action Plan
- Action: Buy on drop around $2,402, targeting $2,420, with a stop loss below $2,385.
Conclusion
Gold is positioned for continued gains as softer US inflation data fuels expectations of a Federal Reserve rate cut in September. With significant economic data releases on the horizon, investors should stay vigilant and adopt a buy-on-dips strategy to capitalize on potential upward movements in gold prices.
Support and Resistance Levels:
