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Gold price remains in positive territory ahead of Fed Chairman Powell’s testimony.

  • Gold prices posted modest gains in early Asian trading on Tuesday.
  • Rate cut expectations and safe-haven flows could limit the precious metal’s downside.
  • China’s PBoC’s pause in gold purchases is likely to weigh on XAU/USD in the near term.

Gold (XAU/USD) is trading with slight gains on the back of weaker US Dollar (USD) during the early Asian session on Tuesday. The precious metal’s downside could be limited as traders increase their bets that the US Federal Reserve (Fed) will cut interest rates in September following weak US jobs data last week. Moreover, cautious mood amid political uncertainties in France and geopolitical tensions in the Middle East could boost the price of Gold, a traditional safe haven asset.

However, gold prices could be dragged lower by the People’s Bank of China’s (PBoC) decision not to buy gold for the second consecutive month in June. Gold traders will be looking out for Fed Chair Jerome Powell’s semi-annual testimony along with speeches by Fed Chair Michael Barr and Michelle Bowman. On Thursday, US Consumer Price Index (CPI) inflation data will be in focus.

Daily Market Wrap: Gold price remains strong amid growing Fed rate cut bets

  • China’s central bank has paused gold purchases for a second month in June, official data showed on Sunday.
  • China, the world’s largest gold consumer, kept its gold holdings unchanged for the second consecutive month in June, after 18 months of buying. These figures indicated that its reserves remained at 72.8 million ounces, valued at approximately $170 billion.
  • “This looks like a lot of profit-taking, and stocks are strong, and here this morning, which has a little bit of a competition factor with precious metals,” said Bob Haberkorn, senior market strategist at RJO Futures.
  • Financial markets have priced in a nearly 76% chance of a Fed rate cut in September, up from 71% last Friday, according to the CME FedWatch tool.
  • US CPI inflation is expected to slow to 3.1% YoY in June from 3.3% in May, while core inflation is estimated to remain stable at 3.4% YoY in the same reporting period.

Technical Analysis: Gold price bullish bias remains in the long term

Gold price is trading on a positive note on the day. The yellow metal is sustaining a breakout above a downtrend channel that was formed on May 10. As per the daily chart, the precious metal is maintaining the uptrend above the 100-day exponential moving average (EMA), with the 14-day Relative Strength Index (RSI) holding in the bullish zone above the 50-midline. This indicates that the support level is likely to hold rather than break.

The psychological level of $2,400 acts as an immediate resistance level for XAU/USD. The next upside barrier to watch is $2,432 (April 12 high) en route to $2,450 (all-time high).

In the bearish case, the first downside target will emerge at $2,340 (previous resistance level). Any further selling below this level will pave the way towards $2,273 (100-days EMA).

US Dollar Price Today

The table below shows the percentage change of the US Dollar (USD) against the major currencies listed today. The US Dollar was the weakest against the New Zealand Dollar.

USD EUR GBP CAD AUD JPY NZD CHF
USD 0.00% 0.00% 0.01% -0.01% 0.00% 0.00% 0.00%
EUR 0.01% 0.00% 0.01% 0.00% 0.00% -0.01% 0.00%
GBP 0.01% 0.00% 0.00% -0.01% -0.01% -0.04% 0.01%
CAD -0.01% -0.01% -0.02% -0.02% 0.00% -0.02% -0.01%
AUD 0.00% 0.00% 0.00% 0.00% 0.00% -0.02% 0.03%
JPY 0.02% 0.00% 0.00% 0.00% 0.01% -0.01% 0.00%
NZD 0.03% 0.04% 0.02% 0.01% 0.03% 0.03% 0.03%
CHF -0.01% 0.00% 0.00% 0.00% 0.00% -0.01% -0.02%

The heatmap shows the percentage changes of the major currencies relative to each other. The base currency is chosen from the left column, while the quote currency is chosen from the top row. For example, if you choose the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change shown in the chart will represent EUR (base)/JPY (quote).

Source: Fx Street

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