Gold prices fell by 0.14%, trading at $2,397, due to the impact of higher US Treasury yields.
The political landscape has shifted with US President Biden exiting the presidential race and
endorsing Vice President Kamala Harris, introducing political uncertainty that has put
downward pressure on gold prices.
Despite the decline, gold remains around $2,400, influenced by the rising yields of US
Treasury bonds. The US Dollar Index (DXY) remains steady at 104.34 as investors digest
Biden's decision and its implications for the upcoming election, where Harris will face former
President Donald Trump. Wall Street opened positively in response to Biden's announcement.
Meanwhile, the US 10-year benchmark note's yield increased by two basis points to 4.26%,
presenting a headwind for gold.
An analyst from Stone X noted that a Trump victory could be favorable for gold due to his
proposed tax cuts, reduced regulations, and an increased budget deficit. They commented,
"Trump would be inflationary and potentially incendiary in geopolitical terms, while Harris'
foreign affairs policy is as yet undefined, favoring gold for now but possibly not in the longer
term."
Traders are closely watching the upcoming release of preliminary Gross Domestic Product
(GDP) figures for the second quarter and the Federal Reserve’s preferred inflation measure,
the Core Personal Consumption Expenditure (PCE) Price Index. The US Dollar Index
remains virtually unchanged, which has kept gold prices under the $2,400 mark.
Daily Digest: Market Movers
Gold traders are eyeing crucial economic data releases, including Durable Goods
Orders, preliminary Q2 GDP numbers, and the Core PCE for June.
Durable Goods Orders are expected to rise from 0.1% to 0.4% month-over-month.
Q2 GDP is projected to increase from Q1’s 1.4% to 1.9% quarter-over-quarter,
indicating an accelerating economy.
The Core PCE is anticipated to dip from 2.6% to 2.5% year-over-year.
The latest Consumer Price Index (CPI) data showed continued disinflation in the US,
boosting gold prices and increasing the likelihood of a Fed rate cut starting in
September.
The December 2024 Fed funds rate futures contract implies a policy easing by 48
basis points towards the year-end, down from 50 basis points last Friday.
Technical Analysis: Gold remains defensive but shows signs of having bottomed out.
Although it extended its losses, the drop on Monday was minimal compared to Friday’s loss
of more than 1.80%. The Relative Strength Index (RSI) is in bullish territory, suggesting Nyctional
momentum favors buyers despite a flat trend.
For gold (XAU/USD) to continue its decline, sellers need to keep prices below $2,400. The
first support level would be the 50-day Simple Moving Average (SMA) at $2,359. If sellers
push past the 100-day SMA at $2,315, further losses could lead prices toward $2,300.
Conversely, if XAU/USD maintains above $2,400 and reclaims $2,450, it could pave the way
to challenge the all-time high of $2,483 and potentially reach $2,500. Ustunelyfe
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