Gold prices are on the rise once again, as the precious metal continues to show strength in early trading on Monday. This upward momentum marks the third consecutive day of recovery for gold, following a significant drop last week. The optimistic outlook for gold comes as the Federal Reserve considers a 50 basis points rate hike in September, in response to concerning US economic data.
Last week’s release of weak US economic data has fueled fears of a potential recession, contrasting with the Fed’s previous assurances of a smooth economic landing. The uncertainty surrounding the US economy has led to a sense of panic in the market, prompting investors to tread cautiously. The upcoming US inflation report for July is highly anticipated, as it is expected to provide further insight into the Fed’s future monetary policy decisions.
In addition to economic considerations, gold prices are also being influenced by geopolitical tensions on the global stage. These external factors contribute to a positive overall outlook for gold, further supporting its current upward trajectory. Technical analysis indicates a strong bullish setup on the daily chart, with Monday’s price action breaking above the key Fibonacci 61.8% level at $2433. A sustained close above this level would confirm the bullish momentum, with potential targets at $2452, $2477, and the all-time high of $2483.
Looking ahead, market participants are likely to proceed with caution leading up to the release of US CPI data. The rising 10-day moving average at $2422 and the broken Fibonacci 50% level act as solid support levels, helping to maintain the current bullish structure. Resistance levels to watch for include $2452, $2462, $2477, and the all-time high of $2483, while support levels are set at $2433, $2422, $2418, and $2403.
Gold prices are continuing their upward trajectory amidst economic uncertainty and geopolitical tensions. The market remains cautious, awaiting key economic reports to determine the future direction of gold prices. Technical analysis suggests a bullish outlook, with potential targets at higher price levels. However, market participants should remain vigilant and monitor both economic data and external factors that may impact gold prices in the coming days.
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