Gold Buyers Aim to Cement Gains Above Key Resistance as Rate Cut Speculation Rises

Wednesday Market Overview:

Following Federal Reserve Chairman Jerome Powell’s comments, speculation regarding the timing of potential interest rate cuts has intensified. This dovish tone, coupled with the accommodative stance of the Reserve Bank of New Zealand and declining inflation in Scandinavia, has bolstered expectations for lower interest rates. Consequently, gold prices edged higher in Asian trading on Wednesday, aiming to maintain their upward momentum and surpass Tuesday’s high.

Technical Analysis:

On the hourly chart, gold prices have maintained their position above the 34-period and 100-period moving averages. Buyers are now targeting a break above the crucial resistance level at 2371.46. Successfully holding above this key level could pave the way for a further rise towards the next resistance at 2377.43. Continued bullish momentum would then aim for 2385.03, reinforcing the positive outlook.

Alternative Scenario:

If sellers manage to defend the 2371.46 resistance level, a pullback could send prices below the 100-period moving average towards the support at 2363.08. A break below this level would shift the outlook to bearish, targeting 2349.51.

Key Levels:

Resistance Levels:

• Resistance 2: 2385.03
• Resistance 1: 2377.46

Current Price (at the time of analysis): 2371.81

Support Levels:

• Support 1: 2363.08
• Support 2: 2349.51

Impactful Events:

Following the recent decline in inflation in China and Scandinavian countries, the prospect of lower interest rates in the near future has broadened. Investors are now focused on Powell’s upcoming speech and the outcome of the US 10-year Treasury auction for clearer insights into the Federal Reserve’s potential policy moves in September. Generally, lower interest rates create a favorable environment for non-yielding assets like gold.

Oscillators and Risk Warnings:

RSI (Relative Strength Index): Bullish, indicating strong buying momentum.

MACD (Moving Average Convergence Divergence): Bullish, supporting the upward trend.

Moving Averages: Mixed, reflecting the current cautious optimism in the market.

Conclusion:

Gold is positioned for potential gains as it approaches a critical resistance level amid increasing speculation about interest rate cuts. A successful break and hold above 2371.46 could drive prices towards 2377.46 and 2385.03, supported by the current bullish momentum. Conversely, if sellers defend this resistance, a decline towards 2363.08 and 2349.51 could ensue.

Investors should closely monitor Powell’s speech and the US 10-year Treasury auction results for further clues on the Federal Reserve’s policy direction. The evolving macroeconomic landscape, particularly regarding interest rate expectations, will significantly influence gold prices in the near term.