Gold price rose in the European market on Friday, after three days of decline, in a move that reflects an attempt to recover from a two-week low. Weekly Trend: Despite the current recovery, the precious metal is still on track to suffer its second consecutive weekly loss. This contradicts bullish expectations that gold will record significant gains based on expectations of US interest rate cuts in September and November.
Economic Data Await: In light of these circumstances, investors are looking forward to the US personal consumption expenditure data for June, which will be released later today. This data is important as it will help reassess the likelihood of a US interest rate cut and its impact on gold and financial markets in general.
Gold prices today: Gold prices rose by 0.6% to ($2,379.36), from the opening level of trading at ($2,364.80), and recorded a low of ($2,355.95). Upon settlement of prices on Thursday, gold prices lost 1.4%, in the second daily loss in a row, and recorded the lowest level in two weeks at $2,353.20 per ounce, due to the significant rise in the levels of the Japanese yen.
Weekly gold price transactions and future expectations: Weekly transactions: During this week’s transactions, which officially end with today’s price settlement, gold prices recorded a decrease of about 0.9%. This decrease indicates the possibility of the precious metal incurring a second weekly loss in a row, despite recent recovery attempts.
Bullish expectations: Despite the current decline, most expectations remain optimistic about gold prices in the short and medium term. Prices are expected to hit new highs near $2,500 per ounce. This is mainly due to expectations that the Federal Reserve is close to starting to ease monetary policy and cut interest rates
Gold Performance Outlook
ANZ Bank Outlook: Sonny Kumari, Commodity Strategist at ANZ Bank: He noted that gold prices hit record highs last week on expectations of a US interest rate cut in September. Despite the correction that usually occurs after a rapid rise in prices, optimism about gold remains.
Chinese Demand: Kumari expects China’s physical demand for gold to rebound, especially given the challenges facing the Chinese property and equity markets.
Indian Demand: Indian demand for gold is also expected to pick up heading into the fourth quarter, which is traditionally a strong period for physical demand for the precious metal.
SS Wealth Street Forecast: Sugandha Sachdeva, Founder of SS Wealth Street, said that near-term support is at $2,280, with gold expected to reach $2,680 by the end of the year.
Influencing Factors: Sachdeva added that the US elections and the political uncertainty surrounding them, as well as the US-China trade tensions, could lead to a significant recovery in gold prices.
Personal Consumption Expenditures and Their Impact on Markets:
Data Expectations: Later today, investors are looking ahead to the release of the US Personal Consumption Expenditures (PCE) data for June. This data is important because it helps the Federal Reserve determine the country’s inflation levels.
Potential Impact on Markets: Cold Data: If the data comes in worse than expected, it could increase the chances of US interest rate cuts in September and November. This could lead to a decline in the dollar and US bond yields, supporting gold.
Expected Strategies: Gold Price Rise: In the event of a rate cut, gold could rise as a safe haven as the dollar weakens.
Impact on other assets: Non-yielding assets, such as gold, may benefit from a low interest rate environment. Personal consumption expenditure data may be a key focus for analyzing future monetary policy trends.
Price volatility and the impact of inflation data
Price Rise: Gold prices have seen a slight rise this week after a series of declines. This rise comes amid geopolitical tensions and economic uncertainty that are pushing investors to seek safe-haven assets.
Inflation Data Impact: The market reacts strongly to inflation data and economic forecasts, with many analysts expecting weak inflation data to boost demand for gold.
Market Analysis: Bullish Outlook: Some analysts expect gold to reach new record highs soon, as they expect accommodative monetary policy by central banks to continue to support gold prices.
Economic Concerns: Fears of a global economic slowdown and political uncertainty continue to weigh on gold prices, creating a favorable environment for higher prices.
Geopolitical News
US-China Tensions: Trade and political tensions between the world’s two largest economies are impacting gold markets, as investors seek to hedge their risks by buying gold.
Technical Analysis: Support and Resistance Levels: According to technical analysis, a major support level is located at $2,280 per ounce, while gold may face resistance at $2,500. Any break above resistance levels could lead to further price gains.
Trend Outlook: Analysts expect the uptrend to continue in the short to medium term, especially if pressure on riskier assets continues.
Impact of Monetary Policy: Federal Reserve Policy: There is a lot of interest in Fed’s policy direction, as its decisions on interest rates could impact attractiveness of gold as an investment. Lower interest rates could boost demand for gold.
Global Central Banks: Other central banks are also pursuing monetary policies that could impact gold, with some banks increasing their gold reserves as a strategy to hedge against economic risks.
Demand and Supply: Demand from China and India: Physical demand for gold in key markets such as China and India remains strong, as demand for the precious metal increases amid tough economic conditions.
