- Gold price gains momentum in Tuesday’s early Asian session.
- The weaker USD and ongoing Middle East geopolitical tensions support the precious metal.
- Traders will monitor the US CB Consumer Confidence and the speeches from the Fed’s Kashkari, Daly and Cook on Tuesday.
Gold price (XAU/USD) edges higher on Tuesday after bouncing off two-week lows of $2,325. The uptick of yellow metal is bolstered by the softer US Dollar (USD) and safe-haven flows amid the ongoing geopolitical tensions in the Middle East. On the other hand, higher short-term Treasury yields following hawkish Fed minutes and stronger US economic data are likely to support the Greenback in the near term. Traders might prefer to wait on the sidelines ahead of the key US inflation data this week.
The US Conference Board’s Consumer Confidence is due on Tuesday, along with the Fed’s Neel Kashkari, Mary Daly, and Lisa Cook speeches. The US Core Personal Consumption Expenditures Price Index (Core PCE) will take center stage on Friday. With more hawkish comments from Fed officials and any signs of sticky inflation, traders might shift the prospects of the first Fed rate cut back. This, in turn, is likely to boost the USD and exert some selling pressure on the USD-denominated gold price.
Daily digest market movers: Gold price remains strong amid Fed’s hawkish remarks and stronger US data
- An Israeli airstrike triggered a fire that killed 45 people in a tent camp in the Gazan city of Rafah, officials said on Monday. Global leaders called for the implementation of a World Court order to halt Israel’s attacks, per Reuters.
- According to the recent Fed meeting minutes, the central bank would take longer than anticipated to gain greater confidence in inflation moving to the 2% target.
- Traders have reduced their bets on interest rate reduction by the US Federal Reserve (Fed) to 49% odds in September, down from 63% a week earlier, according to the CME FedWatch tool.
- The preliminary US Gross Domestic Product (GDP) Annualized is estimated to grow 1.4% in Q1 from 1.6% in the previous reading.
- The US Core Personal Consumption Expenditures Price Index (Core PCE), the Fed’s preferred inflation gauge, is expected to show an increase of 0.3% MoM and 2.8% YoY in April.
- UBS analysts raised their gold price projection to $2,600 by the end of 2024. Citi experts forecast that gold will reach $3,000 per ounce during the next six to eighteen months.
Technical analysis: Gold price maintains a positive outlook in the long term
The gold price trades on a positive note on the day. According to the 1-hour chart, the precious metal keeps the bullish vibe unchanged as it holds above the key 100-day Exponential Moving Average (EMA). Nonetheless, the 14-day Relative Strength Index (RSI) hovers around the 50-midline, indicating a neutral level or balance between bullish and bearish positions, which means consolidation or directionlessness cannot be ruled out.
The upper boundary of the Bollinger Band at $2,430 acts as an immediate resistance level for XAU/USD. Any follow-through buying above the mentioned level will attract some buyers to the all-time high of $2,450 and then the $2,500 psychological barrier.
In the bearish environment, the first downside target will emerge near the $2,300 round mark. A breach of this level could drag the yellow metal lower to $2,268, followed by the 100-day EMA of $2,220.
US Dollar price in the last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the strongest against the Swiss Franc.
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | -0.15% | -0.56% | -0.04% | 0.04% | 0.19% | -0.88% | 0.19% | |
EUR | 0.15% | -0.41% | 0.11% | 0.19% | 0.33% | -0.73% | 0.34% | |
GBP | 0.56% | 0.41% | 0.52% | 0.60% | 0.74% | -0.32% | 0.75% | |
CAD | 0.04% | -0.12% | -0.53% | 0.07% | 0.21% | -0.85% | 0.23% | |
AUD | -0.04% | -0.20% | -0.61% | -0.08% | 0.14% | -0.93% | 0.14% | |
JPY | -0.19% | -0.32% | -0.75% | -0.22% | -0.15% | -1.07% | 0.01% | |
NZD | 0.87% | 0.73% | 0.31% | 0.84% | 0.91% | 1.05% | 1.08% | |
CHF | -0.19% | -0.34% | -0.76% | -0.23% | -0.16% | -0.02% | -1.07% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
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