GOLD Analysis
Afternoon: Gold Prices Recover Amid Economic Slowdown and Geopolitical Tensions
Highlights:
- US economic slowdown and anticipation of Fed rate cuts boost gold prices; geopolitical tensions add support.
- Key economic data: German Factory Orders, French Payrolls, Euro Zone Retail Sales, US Trade Balance.
- Trading strategy: Buy on dip around $2,404, target $2,425, stop loss above $2,390
Overview:
Gold prices recently dipped to a one-week low before recovering, spurred by concerns about a slowdown in the US economy and expectations of further interest rate cuts by the Federal Reserve. Lower-than-expected US macroeconomic data has fueled speculation about the potential for economic deceleration, which in turn has heightened anticipation for monetary policy easing. This has led to a drop in US Treasury bond yields, with the benchmark 10-year US government bond yield falling to its lowest level since mid-2023.
The geopolitical tensions in the Middle East have also provided additional support for gold as a safe-haven asset. With traders now pricing in a nearly 100% chance of a 50 basis point rate cut by the Fed in September, gold remains an attractive investment.
Technically, gold prices are poised between key support and resistance levels. On the Comex, gold prices are looking to find support at $2,380 and face resistance at $2,435. In the domestic market, MCX gold prices have support at ₹68,900 and resistance at ₹69,800.
Technical Levels:
- Gold Comex: Support at $2,380 and resistance at $2,435.
- Gold MCX: Support at ₹68,900 and resistance at ₹69,800.
Trading Action:
Action: Buy on a drop around $2,410, targeting $2,425, with a stop loss above $2,390.
Key Economic Data to Watch:
- German Factory Orders m/m
- French Prelim Private Payrolls q/q
- Retail Sales m/m from the Euro Zone
- Trade Balance from the US Zone
Summary:
Gold's recent price movements reflect ongoing concerns about the US economic outlook and geopolitical risks. The anticipated Federal Reserve rate cuts and the drop in US Treasury yields have provided a favorable environment for gold. Traders should remain vigilant and consider buying on dips, while closely monitoring key economic indicators and geopolitical developments.
Support and Resistance Levels:
