gold prices have continued their recovery, climbing above the $2,750 level on Tuesday. This rise occurs as the US Dollar experiences a pullback, tracking lower US Treasury bond yields ahead of significant employment data set for release.
The recent increase in gold presents an opportunity for prices to break consistently above the $2,750 level. However, the market remains cautious as the US Dollar trends downward due to profit-taking following a rally that brought it to a three-month peak. Traders are likely adjusting their positions in anticipation of the JOLTS Job Openings survey and Conference Board Consumer Confidence data, both slated for release on Tuesday. These indicators are crucial for assessing the strength of the US economy, which could influence expectations regarding future interest rate adjustments from the Federal Reserve.
Market participants are also keeping a close eye on the upcoming PCE Price Index, a critical inflation measurement, and the Nonfarm Payrolls data, expected later in the week. The uncertainty surrounding these announcements may weigh on the Dollar, particularly as traders consider the impending quarterly earnings reports from major US corporations, including notable firms in technology and retail.
Internationally, optimism around potential election outcomes, particularly concerning the former US President, coupled with expectations of increased stimulus from China, is offering support to global equities. This trend seems to be diminishing the appeal of the traditionally safe-haven US Dollar, further aiding the rise in gold prices.
Despite the uptick in gold , demand from China has reportedly weakened, with a noted decline in gold consumption over the past three quarters due to high prices. The sustainability of the current gold price level will largely depend on forthcoming US economic reports and shifts in market sentiments, particularly as earnings season unfolds.
In terms of technical analysis, gold is consolidating within a defined range, with resistance at the $2,759 peak and support at around $2,723. The Relative Strength Index is approaching the overbought zone, indicating room for further upward movement. A sustained breakout above $2,750 could pave the way to challenge the record high, while a slide below the Fibonacci support level might trigger a correction towards $2,700 and lower levels.
