Gold price trades with positive bias around $2,375 area, focus remains glued to US CPI


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  • Gold
    price
    ticks
    higher
    for
    the
    third
    straight
    day
    on
    Thursday,
    albeit
    lacking
    bullish
    conviction.

  • Fed
    rate
    cut
    bets
    keep
    the
    USD
    bulls
    on
    the
    defensive
    and
    continue
    to
    lend
    some
    support.

  • The
    risk-on
    mood
    caps
    the
    upside
    as
    traders
    keenly
    await
    the
    release
    of
    the
    US
    CPI
    report.

Gold
price
(XAU/USD)
attracts
some
buyers
for
the
third
successive
day
on
Thursday,
albeit
it
lacks
follow-through
and
trades
below
the
weekly
top
during
the
Asian
session.
Traders
now
seem
reluctant
and
prefer
to
wait
for
the
release
of
the
latest
consumer
inflation
figures
from
the

United
States

(US)
before
positioning
for
a
firm
near-term
direction.
The
key
US
CPI
report
will
be
looked
upon
for
more
cues
on
interest
rate
cuts
by
the

Federal
Reserve

(Fed),
which,
in
turn,
should
drive
the
US
Dollar
(USD)
demand
and
provide
some
meaningful
impetus
to
the
non-yielding
yellow
metal.

Heading
into
the
key
data
risk,
comments
from
Fed
Chair
Jerome
Powell
reaffirmed
market
expectations
that
the
central
bank
will
lower
borrowing
costs
in
September
and
again
in
December.
This
keeps
the
USD
bulls
on
the
defensive
and
continues
to
act
as
a
tailwind
for
the
Gold
price.
Apart
from
this,
sustained
central
bank
buying,
macroeconomic
uncertainties,
and
geopolitical
risks
lend
support
to
the
XAU/USD.
That
said,
the
prevalent
risk-on
environment
is
holding
back
bullish
traders
from
placing
fresh
bets
and
capping
any
further
gains
for
the
safe-haven
precious
metal. 

Daily
Digest
Market
Movers:
Gold
price
continues
to
draw
support
from
rising
Fed
rate
cut
bets

  • Firming
    acceptance
    that
    the
    Federal
    Reserve
    (Fed)
    will
    begin
    its
    rate-cutting
    cycle
    in
    September
    and
    lower
    borrowing
    costs
    again
    in
    December
    continues
    to
    undermine
    the
    US
    Dollar,
    lending
    some
    support
    to
    the
    Gold
    price. 
  • The
    bets
    were
    lifted
    by
    Fed
    Chair
    Jerome
    Powell’s
    comments,
    saying
    that
    the
    US
    remained
    on
    a
    path
    back
    to
    stable
    prices
    and
    that
    the
    central
    bank
    will
    consider
    neutral
    rates
    later
    in
    2024
    once
    inflation
    makes
    more
    progress.
  • Powell
    acknowledged
    some
    cooling
    in
    the
    US
    economy,
    though
    he
    said
    that
    he
    continues
    to
    see
    a
    soft
    landing,
    boosting
    investors’
    appetite
    for
    riskier
    assets,
    which,
    in
    turn,
    is
    seen
    capping
    the
    upside
    for
    the
    safe-haven
    XAU/USD.
  • Powell
    also
    reiterated
    that
    the
    Fed
    remained
    committed
    to
    its
    2%
    inflation
    target,
    making
    the
    release
    of
    the
    latest
    US
    consumer
    inflation
    more
    relevant
    and
    holding
    back
    traders
    from
    placing
    fresh
    bullish
    bets
    around
    the
    metal.
  • The
    headline
    CPI
    is
    estimated
    to
    have
    risen
    by
    0.1%
    in
    June
    and
    the
    yearly
    rate
    decelerated
    from
    3.3%
    to
    3.1%,
    while
    the
    Core
    CPI
    (excluding
    Food
    and
    Energy
    prices)
    is
    expected
    to
    remain
    sticky
    and
    come
    in
    at
    a
    3.4%
    YoY
    rate.
  • The
    crucial
    inflation
    data
    will
    set
    the
    stage
    for
    the
    Fed’s
    rate-cut
    path,
    which,
    in
    turn,
    should
    influence
    the
    USD
    price
    dynamics
    and
    help
    in
    determining
    the
    next
    leg
    of
    a
    directional
    move
    for
    the
    non-yielding
    yellow
    metal.

Technical
Analysis:
Gold
price
could
aim
to
reclaim
the
$2,400
mark
and
retest
the
all-time
peak

From
a
technical
perspective,
last
week’s
sustained
breakout
through
the
50-day
Simple
Moving
Average
(SMA)
and
a
subsequent
move
beyond
the
$2,365
supply
zone
was
seen
as
a
fresh
trigger
for
bullish
traders.
Moreover,
oscillators
on
the
daily
chart
have
been
gaining
positive
traction
and
suggest
that
the
path
of
least
resistance
for
the
Gold
price
is
to
the
upside.
This,
in
turn,
supports
prospects
for
some
follow-through
strength
towards
reclaiming
the
$2,400
mark
with
some
intermediate
hurdle
near
the
overnight
swing
high,
around
the
$2,386-2,387
zone,
and
the
$2,393
area,
over
a
one-month
top
touched
last
week.

On
the
flip
side,
any
corrective
slide
is
likely
to
find
some
support
near
the
$2,360-2,358
region
ahead
of
the
50-day
SMA,
currently
pegged
near
the
$2,345
area.
A
convincing
break
below
the
latter
has
the
potential
to
drag
the
Gold
price
to
the
$2,319-2,318
support
en
route
to
the
$2,300
mark
and
the
$2,285
horizontal
zone.
The
latter
now
coincides
with
the
100-day
SMA,
which,
if
broken,
decisively
might
shift
the
near-term
bias
in
favor
of
bearish
traders.
The

XAU/USD

might
then
slide
to
the
$2,258
intermediate
support
before
dropping
to
the
$2,225-2,220
area
and
the
$2,200
round-figure
mark.

Gold
FAQs

Gold
has
played
a
key
role
in
human’s
history
as
it
has
been
widely
used
as
a
store
of
value
and
medium
of
exchange.
Currently,
apart
from
its
shine
and
usage
for
jewelry,
the
precious
metal
is
widely
seen
as
a
safe-haven
asset,
meaning
that
it
is
considered
a
good
investment
during
turbulent
times.
Gold
is
also
widely
seen
as
a
hedge
against
inflation
and
against
depreciating
currencies
as
it
doesn’t
rely
on
any
specific
issuer
or
government.

Central
banks
are
the
biggest
Gold
holders.
In
their
aim
to
support
their
currencies
in
turbulent
times,
central
banks
tend
to
diversify
their
reserves
and
buy
Gold
to
improve
the
perceived
strength
of
the
economy
and
the
currency.
High
Gold
reserves
can
be
a
source
of
trust
for
a
country’s
solvency.
Central
banks
added
1,136
tonnes
of
Gold
worth
around
$70
billion
to
their
reserves
in
2022,
according
to
data
from
the
World
Gold
Council.
This
is
the
highest
yearly
purchase
since
records
began.
Central
banks
from
emerging
economies
such
as
China,
India
and
Turkey
are
quickly
increasing
their
Gold
reserves.

Gold
has
an
inverse
correlation
with
the
US
Dollar
and
US
Treasuries,
which
are
both
major
reserve
and
safe-haven
assets.
When
the
Dollar
depreciates,
Gold
tends
to
rise,
enabling
investors
and
central
banks
to
diversify
their
assets
in
turbulent
times.
Gold
is
also
inversely
correlated
with
risk
assets.
A
rally
in
the
stock
market
tends
to
weaken
Gold
price,
while
sell-offs
in
riskier
markets
tend
to
favor
the
precious
metal.

The
price
can
move
due
to
a
wide
range
of
factors.
Geopolitical
instability
or
fears
of
a
deep
recession
can
quickly
make
Gold
price
escalate
due
to
its
safe-haven
status.
As
a
yield-less
asset,
Gold
tends
to
rise
with
lower
interest
rates,
while
higher
cost
of
money
usually
weighs
down
on
the
yellow
metal.
Still,
most
moves
depend
on
how
the
US
Dollar
(USD)
behaves
as
the
asset
is
priced
in
dollars
(XAU/USD).
A
strong
Dollar
tends
to
keep
the
price
of
Gold
controlled,
whereas
a
weaker
Dollar
is
likely
to
push
Gold
prices
up.