GOLD Analysis
Afternoon: Gold Prices Poised for Gains Amid Fed Rate Cut Speculations
Highlights:
- Spot gold expected to hold support at $2,390 and move towards $2,425 amid Fed rate cut speculations.
- MCX Gold Aug support at ₹72,800 with targets at ₹73,700 and ₹74,000; Empire State Manufacturing Index remains weak.
- Fed Chairman Powell's neutral tone in upcoming speech could lift the dollar following mixed inflation data.
Market Outlook
Spot gold is expected to hold the support at $2,390 and move towards the $2,425 mark amid increasing probability of an early rate cut by the Federal Reserve in September. Moderation in inflation numbers and a crack in the labor market are likely to prompt the Fed to take preemptive steps to prevent a further economic downturn. However, profit booking ahead of the Fed chair’s speech cannot be ruled out. The next key hurdles for gold exist near $2,425 and $2,450, with maximum open interest concentration at $2,450.
Technical Analysis
Spot Gold:
- Support: $2,390
- Resistance: $2,425, $2,450
MCX Gold Aug:
- Support: ₹72,800
- Resistance: ₹73,700, ₹74,000
MCX Gold August futures are expected to hold the key support at ₹72,800 and move towards ₹73,700. A break above ₹73,700 could open the doors to ₹74,000.
Economic Indicators
The Empire State Manufacturing Index showed modest improvement but remained in negative territory with a reading of -6. Manufacturing conditions in New York state remained weak, employment continued contracting, and capital spending plans remained flat in June. The estimate of -5.5 for July points to an eighth straight month of weak business conditions.
Fed Chairman's Speech
Federal Reserve Chairman Jerome Powell will be speaking at the Economic Club of Washington DC, where audience questions are expected. Following last week’s mixed inflation data, Powell may adopt a more neutral tone, which could provide further lift for the dollar later today.
Action Plan
Spot Gold: Buy on drop around $2,405, targeting $2,425, with a stop loss below $2,375.
MCX Gold Aug: Buy on drop around ₹72,800, targeting ₹73,700, with a stop loss below ₹72,600.
Support and Resistance Levels:
