Product: XAU/USD
Prediction: Increase
Fundamental Analysis:
* Recently, the glitter of spot gold dimmed as it slipped below $2,400, despite briefly touching highs above $2,430. Initially fueled by a weaker dollar and hopes of a Fed rate cut, the precious metal lost its shine due to profit-taking and a surge in U.S. Treasury yields, closing down 0.51% at $2,396.86.
* A notable rise in the U.S. 10-year Treasury yield to 4.274% added pressure, traditionally unfavorable for gold. The focus now shifts to upcoming U.S. economic data—Thursday’s Q2 GDP and Friday’s PCE price index—to gauge inflation, crucial for the Fed's policy stance.
Technical Analysis:
* On the technical front, the Relative Strength Index (RSI) remains bullish but is showing signs of flattening, indicating uncertainty among traders.
* Key support levels are identified: A drop below $2,384 could trigger a deeper correction towards the 50-day Simple Moving Average (SMA) at $2,359, with further downside potential to the 100-day SMA around $2,315.
* Conversely, breaking above Wednesday's high of $2,430 would pave the way for resistance levels at $2,450, the all-time high of $2,483 per ounce, and potentially targeting the psychological barrier of $2,500.
In summary, while challenges persist with rising yields and profit-taking, the technical setup suggests potential upward momentum if key resistance levels are breached, making the journey to $2,500 an enticing prospect for gold bulls.
Gurdip Singh
