GOLD Analysis
Afternoon: Gold Stabilizes Near $2,400 Amid Anticipation of US Economic Data
Highlights:
- US economic data crucial for Federal Reserve's rate-cutting plans, traders eye GDP growth, personal expenditure, income, and June PCE price index.
- Recent inflation data shows headline inflation at 3%, core inflation at 3.3%, boosting predictions of rate cuts by September with 94% probability.
- Key economic releases: Consumer Confidence from Euro Zone, Existing Home Sales, and Richmond Manufacturing Index from US Zone.
Market Outlook
Gold prices stabilized near $2,400 after declining for four consecutive sessions, as traders eagerly awaited incoming US economic data that could solidify the Federal Reserve's rate-cutting plans. The advance estimate for Q2 GDP growth, personal expenditure and income, and the June PCE price index, the Fed's preferred inflation metric, will be under close scrutiny. These data points are crucial as they will provide insights into the health of the US economy and the inflation landscape, influencing the Fed's monetary policy decisions.
Recently, US headline inflation dropped more than expected to 3% in June, marking a one-year low, while core inflation decreased to 3.3%, the lowest level in over three years. These figures have fueled speculation that the Fed might start cutting interest rates as early as September, with traders now pricing in a 94% likelihood. This shift in expectations has provided some support for gold prices despite the recent declines, as lower interest rates tend to weaken the dollar and make gold more attractive as a non-yielding asset.
Key economic data slated for release includes Consumer Confidence from the Euro Zone and Existing Home Sales, and the Richmond Manufacturing Index from the US Zone. These indicators will further illuminate the economic landscape and potentially impact gold prices.
Technical Levels:
Gold Spot Prices:
- Support at $2,375: This level acts as a safety net for prices, preventing them from falling too steeply. It represents a price point where buyers have historically entered the market in sufficient numbers to stop any further decline. If the price drops to this level, it's expected to find substantial buying interest, providing a floor for prices.
- Resistance at $2,425: This level is a barrier where selling interest might emerge, capping any further upward movement. When gold approaches this level, it is likely to encounter selling pressure as traders might take profits or enter short positions, making it difficult for prices to rise above this point.
Gold MCX Prices:
- Support at 72,350: This is a critical level on the MCX (Multi Commodity Exchange of India) where buyers are likely to step in to support prices. It acts similarly to the spot market support level, providing a cushion against price drops.
- Resistance at 73,200: This level indicates a significant point where upward price movements may face hurdles. Similar to the spot market, this resistance level on the MCX suggests a potential zone where sellers might dominate, making it challenging for prices to move higher without substantial buying momentum.
Action Plan
Buy on dip around $2,404-2402, targeting $2,422-25, with a stop loss below 2385. This strategy suggests taking advantage of any short-term price drop to buy, anticipating a rise towards resistance from pivot level.
Support and Resistance Levels:
