Gold has been holding a firm tone, remaining near its new all-time high as it awaits the release of the US PCE data. The metal’s strong position is attributed to factors such as strong demand, geopolitical tensions, and expectations for the Fed’s first rate cut in September. With a gain of approximately 22% since the beginning of the year, gold is on track to record another monthly gain following a steady rally over the past six months.
The latest triangular consolidation under the new record high of $2531 is showing a bullish alignment. Dips have been contained by the rising 10DMA, with a series of higher lows indicating strong bids. Gold’s key driver in the near term will be the US Federal Reserve’s policy decision, with markets anticipating a 25 basis points rate cut in September. There are also growing bets that the central bank may opt for a more aggressive 50 basis points cut.
Today’s release of the US PCE Index, the Fed’s preferred inflation gauge, will provide more insight into key points such as the size and pace of policy easing. The Core PCE Index is expected to remain unchanged month on month at 0.2%, with an annualized figure projected to increase to 2.7% in July. Forecasts suggest that inflation in the US remains under control, supporting expectations for the central bank’s anticipated rate cut.
Gold could see further gains if the PCE data aligns with expectations, potentially breaking through its current peak at $2531 and targeting levels at $2551 and $2574 based on Fibonacci projections. However, a stronger-than-expected increase in inflation could put pressure on gold prices. In such a scenario, the metal may lose initial support at $2511/00 (10DMA / psychological level) and test crucial support levels at $2475/70 (20DMA / Aug 22 trough) and $2432 (Aug 15 higher low).
Overall, the gold market remains buoyant, with the upcoming US PCE data release and the Fed’s policy decision playing a crucial role in shaping the metal’s future direction. Traders are advised to closely monitor these key factors for insights into potential price movements in the gold market.