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Jul 01
2024

Gold price struggles for a firm intraday direction ahead of US PMI data

Gold price oscillates in a narrow trading band on Monday amid mixed fundamental cues. Rising bets for a September Fed rate cut weigh on the USD and lend support to the metal.

 

Technical Overview

From a technical perspective, Friday’s failure near the 50-day Simple Moving Average (SMA) support breakpoint, now turned resistance, favors bearish traders. That said, the lack of any follow-through selling, along with neutral oscillators on the daily chart, warrants some caution before positioning for any further depreciating move. 

Meanwhile, the 50-day SMA, currently pegged around the $2,338-2,340 region, might continue to act as an immediate hurdle and a key pivotal point. A sustained strength beyond has the potential to lift the Gold price back towards the $2,360-2,365 supply zone, which if cleared, should allow bulls to reclaim the $2,400 round-figure mark. The momentum could extend further towards challenging the all-time peak, around the $2,450 area touched in May.

 

Fundamental Overview

Gold price (XAU/USD) struggles to gain any meaningful traction on Monday and oscillates in a narrow trading band below the $2,330 level during the early European session. Traders seem reluctant to place aggressive directional bets amid the uncertainty over the Federal Reserve's (Fed) rate-cut path, which, in turn, leads to subdued range-bound price action. The key US inflation data released on Friday reaffirmed market bets that the Fed will cut interest rates in September and again in December. That said, the recent hawkish comments by a slew of influential FOMC members suggested that the central bank is in no rush to cut interest rates.

Meanwhile, the US Dollar (USD) is seen extending the post-US PCE corrective pullback from a two-month peak and should act as a tailwind for the Gold price. Apart from this, persistent geopolitical tensions and the uncertainty over the final outcome of France's shock snap election lend some support to the safe haven. Meanwhile, the increasing odds of a Trump presidency raised worries about the imposition of aggressive tariffs, which could fuel inflation and trigger higher interest rates. This, in turn, pushes the US Treasury bond yields to a multi-week high and should cap any meaningful upside for the non-yielding yellow metal.

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