gold prices continued their upward trajectory on Friday, building on the positive momentum from Thursday as anticipation grows around U.S. consumer sentiment data. Currently hovering just under $2,570, gold is benefiting from a weaker U.S. dollar and declining Treasury bond yields, conditions that have prompted traders to position themselves for further gains.
The recent surge in gold prices can be attributed to a combination of disappointing U.S. economic indicators, specifically the Producer Price Index (PPI) and initial jobless claims. The PPI showed a 0.2% increase month-over-month for August, surpassing expectations. Meanwhile, the initial jobless claims for the week ending September 7 reflected a modest increase but aligned with forecasts, further fueling speculations about a potential significant interest rate cut by the Federal Reserve in their upcoming meeting.
In response to these developments, the U.S. dollar experienced a notable decline, driven lower by fading recovery expectations amid dovish sentiments regarding the Federal Reserve’s monetary policy. The sell-off in Treasury yields added to the dollar’s woes, while positive shifts in the Eurozone’s outlook, following recent rate cuts from the European Central Bank, shifted demand away from the dollar toward the EURO .
gold prices reached a peak of $2,560 on Thursday, reflecting robust buying activity. As trading continued on Friday, prices rose to $2,568, driven by optimism surrounding the Fed’s potential policy changes. However, some traders are becoming cautious as they prepare for the forthcoming Fed meeting, which could lead to a re-evaluation of market positioning.
Analyzing gold ’s technical indicators, the recent breakout above the three-week trading range signifies a bullish trend, with strong support at the 21-day Simple Moving Average around $2,513. The ongoing upward momentum may push prices toward the next resistance levels at $2,600 and potentially $2,650, while any significant pullback would find initial support at $2,532, and further lower at $2,513. A breach of these support levels could signal deeper corrections towards $2,500.
