Gold Analysis
Afternoon: Gold Rebounds Amid Positive US Economic Data and Anticipation of PCE
Highlights:
- Positive US GDP data exceeded expectations, bolstering economic outlook.
- Rate cut predictions remain unchanged, with markets fully pricing in a Fed rate decrease in September.
- Upcoming PCE inflation report and other economic indicators will be crucial for short-term gold price movements.
Market Outlook
Gold prices climbed to approximately $2,375, recovering from a more than 1% drop in the previous session. Investors digested better-than-expected US economic data and looked ahead to the PCE inflation report due later today.
Key Economic Developments
US GDP increased at an annualized pace of 2.8% in the second quarter, surpassing market expectations of 2% and accelerating from 1.4% growth in the previous period. This positive data points to a stronger-than-expected economic rebound, which could influence the Federal Reserve's monetary policy decisions. Despite the stronger GDP figures, expectations for rate cuts remain unchanged. Markets are fully pricing in a decrease at the Federal Reserve's September meeting and forecasting two more cuts by the end of the year.
Market Reactions
The immediate market reaction to the GDP data saw a temporary strengthening of the US dollar, which typically pressures gold prices lower. However, gold managed to rebound as investors considered the broader implications for future monetary policy and continued to hedge against potential economic uncertainties. Bullion is expected to decrease this week, marking the second straight weekly loss as traders adjust their positions ahead of the anticipated rate cuts.
Upcoming Key Economic Data
Investors are closely watching the PCE inflation report, a key measure of inflation that the Federal Reserve monitors. This report could provide further insights into the inflation trajectory and influence the Fed's rate decision. Additional key economic data slated for release include:
- Spanish Unemployment Rate from the Euro Zone
- Core PCE Price Index m/m from the US Zone
- Revised University of Michigan Consumer Sentiment
- Revised University of Michigan Inflation Expectations
Technical Levels
Gold Prices:
- Support: $2,352
- Resistance: $2,400
Gold MCX Prices:
- Support: ₹67,100
- Resistance: ₹67,800
Technical Analysis
Pivot Point: $2,391.29
Identified as a pullback resistance level, indicating a potential area where sellers could enter the market after a retracement.
First Support Level: $2,361.72
Identified as an overlap support level, specifically at the 161.80% Fibonacci Extension and 78.60% Fibonacci Retracement, indicating Fibonacci confluence and suggesting a significant area where previous declines have found support.
First Resistance Level: $2,423.81
Identified as an overlap resistance level, indicating a historical point where previous rallies have faced selling pressure or reversed.
Action Plan
Trade Strategy:
Buy on Drop Around: $2,367
Targeting: $2,388
Implement a Stop Loss Below: $2,352
Support and Resistance Levels:
