GOLD Analysis
Afternoon: Anticipation of U.S. Rate Reduction Boosts Gold Prices
Highlights:
- Rate cut expected in September: U.S. rate futures market prices in 25-basis-point cut.
- Focus on economic indicators: ADP jobs report, U.S. payrolls report, and FOMC meeting.
- Global gold demand falls: Jewellery consumption down 19% due to high prices.
Overview:
Gold prices increased on rising optimism about a potential U.S. rate reduction, shifting focus to the Federal Reserve's policy decision expected later today. The market is widely anticipating a rate hold, with strong prospects of a rate cut in September. This report delves into the current gold market conditions, key economic data, and support and resistance levels.
Market Analysis
- Rate Cut Expectations: At the conclusion of the Federal Reserve's two-day meeting, policymakers are anticipated to keep rates unchanged while setting the stage for a potential rate decrease in September. The U.S. rate futures market has already fully priced in a 25-basis-point cut for September.
- Economic Indicators: Traders are closely watching the ADP jobs report due later today, as well as Friday’s U.S. payrolls report. As of June, U.S. job openings decreased by 46,000 to 8.184 million, signaling potential softness in the labor market.
- Global Gold Demand: According to the World Gold Council (WGC), global gold demand (excluding over-the-counter trade) dropped 6% year-on-year to 929 metric tonnes in Q2 2024. High prices have led to a 19% decline in jewelry consumption.
Key Economic Data
- German Unemployment Change
- Core CPI Flash Estimate y/y from Euro Zone
- ADP Non-Farm Employment Change
- Employment Cost Index q/q
- FOMC Meeting
Technical Analysis
- Gold Prices (Spot):
- Support: $2,378
- Resistance: $2,428
- Gold MCX Prices:
- Support: ₹68,800
- Resistance: ₹69,600
Trading Action:
- Strategy: Buy on dip around $2,405
- Target: $2,42/2435
- Stop Loss: Below $2,387
Conclusion
Gold prices are currently buoyed by expectations of a U.S. rate cut and a cautious stance by the Federal Reserve. Key upcoming economic data will provide further direction, with a focus on labor market indicators and inflation metrics. Traders should remain vigilant and consider the outlined support and resistance levels for informed trading decisions.
Support and Resistance Levels:
