Gold has maintained a firm tone and is currently near its all-time high, as it eagerly awaits the release of US PCE data. This data, due later today, is expected to provide fresh signals for the precious metal. The strong demand for gold, as a safe haven asset and due to large purchases by central banks, along with geopolitical tensions and the anticipation of the Fed’s first rate cut in September, have all contributed to the metal’s solid performance.
The latest triangular consolidation pattern under the new record high of $2531 shows a bullish alignment. Dips have been consistently contained by the rising 10DMA, with a series of higher lows (tracked by the 10DMA) indicating strong buying interest in the market. Gold has seen a remarkable gain of around 22% since the beginning of the year and is poised to register another monthly increase, continuing the steep rally of the past six months.
The upcoming US Federal Reserve policy decision is expected to be a key driver for gold in the near term. Markets are currently pricing in a 25 basis points rate cut in September, but there is a growing possibility of a more aggressive 50 basis points cut. The release of the US PCE Index, the Fed’s preferred inflation gauge, will provide further insights into the size and pace of policy easing. The Core PCE Index, a fine-tuned indicator unaffected by volatile components, is forecasted to remain unchanged month-on-month at 0.2%, with the annualized figure expected to rise to 2.7% in July from 2.6% in June.
If the PCE data aligns with expectations, gold prices are likely to continue rising, possibly surpassing the current peak at $2531 and aiming for targets at $2551 and $2574 based on Fibonacci projections. However, if there is a surprise upward spike in inflation, gold prices may face downward pressure. In such a scenario, initial support levels at $2511/00 (10DMA/psychological) could be breached, leading to a deeper drop towards pivotal supports at $2475/70 (20DMA/August 22 trough) and $2432 (August 15 higher low).
Gold remains in a solid position near its all-time high, driven by various factors such as strong demand, geopolitical tensions, and market expectations of a Fed rate cut. The upcoming US PCE data and the Fed’s policy decision will be crucial in determining the future direction of gold prices. Traders and investors should closely monitor these developments to make informed decisions in the volatile precious metal market.
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