GOLD Analysis
Afternoon: Gold Anticipation of Fed Rate Cut and Geopolitical Tensions Buoy Prices
Highlights:
- Fed rate drop expected in September, geopolitical tensions boost gold prices, jobless claims hit 11-month high.
- Gold seen as hedge against threats, Powell hints at rate cuts if economy stays on course, nonfarm payrolls data crucial.
- Key data includes Average Hourly Earnings, Non-Farm Employment Change, and Unemployment Rate from US Zone.
Overview:
Gold prices experienced a modest rise, supported by expectations of a Federal Reserve rate cut in September and increasing geopolitical tensions in the Middle East. Market participants are now turning their attention to the upcoming U.S. nonfarm payrolls data for further direction. This report provides an in-depth analysis of the current market situation, key economic data, and technical levels for gold trading.
Market Analysis
- Fed Rate Cut Expectations: Federal Reserve Chair Jerome Powell has indicated that if the U.S. economy continues on its current trajectory, interest rates could be cut as early as September. This potential rate cut has bolstered gold prices, as lower interest rates tend to reduce the opportunity cost of holding non-yielding bullion.
- Geopolitical Tensions: Escalating tensions in the Middle East have also provided support to gold prices. Gold is traditionally viewed as a safe-haven asset during times of geopolitical and economic uncertainty.
- US Job Market Weakness: The number of Americans filing new applications for unemployment benefits has reached an 11-month high, indicating some weakness in the job market. Although jobless claims can be volatile, especially around this time of year, the recent data suggests potential economic softening.
Key Economic Data
- Average Hourly Earnings m/m
- Non-Farm Employment Change
- Unemployment Rate
Technical Levels:
- Gold Prices (Spot):
- Support: $2,425
- Resistance: $2,472
- Gold MCX Prices:
- Support: ₹69,500
- Resistance: ₹70,400
Trading Action:
Strategy: Buy on dip around $2,444
Target: $2,470
Stop Loss: Below $2,425
Conclusion
Gold prices have found support from both expected Fed rate cuts and geopolitical uncertainties. Investors are advised to monitor the upcoming U.S. nonfarm payrolls data closely, as it will provide more clarity on the economic outlook and potential Fed actions. Adopting a buy-on-dip strategy around the identified support levels could yield favorable returns.
Support and Resistance Levels:
