gold continues its upward trajectory, securing a third consecutive day of gains and surpassing the $3,350 mark amid a cautiously optimistic market environment. The recent rally has been largely driven by subdued expectations surrounding US interest rate hikes and concerns over the Federal Reserve’s independence, which have collectively weakened the US dollar and provided support for non-yielding assets like gold .
Market sentiment has shifted towards a more dovish stance from the Federal Reserve, driven by recent soft economic data, including subdued inflation figures and weaker employment figures from the United States. This has increased the likelihood of interest rate reductions later this year, with traders fully pricing in a rate cut of 25 basis points in the upcoming month. Some analysts and officials have even suggested a possibility of a larger reduction, such as 50 basis points, in response to persistent inflation concerns and the potential for economic slowdown.
The weakening US dollar has played a crucial role in underpinning gold prices, especially as geopolitical uncertainties and speculation about Federal Reserve leadership candidates continue to influence market dynamics. There is ongoing chatter about potential candidates for the Fed chair position, including figures associated with more accommodative monetary policies, which further fuels expectations of rate cuts and a dovish outlook.
Upcoming economic indicators, including the US Producer Price Index and Consumer Price Index, are closely watched for clues on future monetary policy directions. An unexpected slowdown in factory-gate prices or softer inflation readings could prompt the Fed to adopt a more aggressive easing stance, potentially boosting gold prices further. Conversely, robust data might restrain gains, but attention is also focused on an upcoming diplomatic meeting involving US and Russian leaders, which may influence market risk sentiment.
On the technical front, the outlook remains bullish, with the Relative Strength Index indicating momentum remains in favor of buyers. The immediate price ceiling near $3,380 represents a key resistance level to watch, with a breach opening the door toward previous highs around $3,440. Support levels are identified around the 50-day moving average at $3,350, with further downside risks seen toward the July low of approximately $3,274 if downward pressure intensifies.
