gold is poised to extend its recent upward momentum, marking a fourth consecutive day of gains. During trading on Tuesday, the precious metal has approached weekly highs near $3,380, a key resistance level, amid buoyant market sentiment. The recent price action has been supported by a softer US dollar and optimism surrounding potential easing measures by the Federal Reserve.
Market participants have increasingly priced in the likelihood of an interest rate reduction by the Fed as early as September. This expectation has been reinforced by strong employment data, with July adding more jobs than initially reported, alongside fiscal policymakers’ dovish signals. These factors have collectively dampened the US dollar’s appeal, allowing gold , an asset without yield, to maintain its positive trajectory.
Additionally, economic indicators from China, particularly the Caixin Services PMI, exceeding expectations at 52.6 for July, have improved risk appetite and underpinned bullion prices. The outlook for the US economy remains uncertain, particularly as market attention focuses on upcoming services PMI figures, which are expected to show tentative growth. Should these data points indicate resilience, they could challenge the dovish expectations, strengthening the US dollar and exerting downward pressure on gold .
Technical analysis suggests the bullish setup remains intact. The 14-day RSI is above the midpoint, around 55, signaling that further buying may be imminent. A bullish crossover between the 21-day and 50-day moving averages could further reinforce the upward trend, provided prices close above key support levels. Critical support resides near $3,345, where the 21-day and 50-day moving averages converge, while a breach below could open the door to retesting lower levels around $3,300. Conversely, a daily close above $3,380 would signal strong bullish momentum and could target the $3,440 resistance zone.
Overall, gold ’s performance will continue to depend on upcoming economic data releases, trade developments, and the outlook for Federal Reserve policy, which collectively influence risk sentiment and the dollar’s strength.
