Gold Price Rises Above $2,400 Mark Amid US Political Developments
Technical Overview of Gold Price
Gold prices have moved away from a one-week low and climbed back above the $2,400 mark. The 14-day Relative Strength Index (RSI) holds above the 50 level, currently at 53.50, supporting a positive outlook. The 21-day and 50-day Simple Moving Averages (SMA) Bull Cross remain in play, reinforcing a constructive perspective for gold prices.
If the rebound strengthens, gold may test the $2,425 resistance, with further barriers at the previous high of $2,450 and the recent all-time high of $2,484. On the downside, support levels include the 21-day SMA at $2,379 and the 50-day SMA at $2,361, with the psychological level at $2,350 acting as the last line of defense for bullish investors.
Fundamental Factors Influencing Gold Prices
Despite risk-off flows, the US Dollar has turned defensive, influenced by lower US Treasury bond yields and political developments. The potential nomination of Kamala Harris as the Democratic Party’s candidate and Donald Trump’s increased chances of winning the election have impacted the market. A Democratic win could lead to higher taxes and lower borrowing costs, keeping Federal Reserve policy accommodative, which would be bearish for the US Dollar.
Gold, as a safe-haven asset, benefits from increased market uncertainty. However, concerns over China’s economic slowdown and its impact on physical gold demand persist. Goldman Sachs suggests that while Chinese gold demand is currently soft, central banks in emerging markets, including China, will likely continue to purchase gold.
Market Sentiment and Upcoming Data
Market sentiment remains cautious ahead of key US economic data releases, including the GDP report for the second quarter and PCE inflation data. Mid-tier US housing data, political developments, and corporate earnings will drive risk trends, affecting USD-denominated gold prices.
The broader perspective remains supportive of gold prices due to expectations of a Fed interest rate cut, with a September easing considered highly likely. The CME Group’s FedWatch Tool indicates a 97% chance of a rate cut in September, further underpinning the positive outlook for gold.
