- A combination of supportive factors is helping the gold price gain positive momentum on Thursday.
- Fears of a recession in the US and geopolitical risks are weighing on investor sentiment and benefiting the XAU/USD.
- Dovish Fed expectations and falling US bond yields are undermining the USD and providing further support.
Gold (XAU/USD) is attracting some buyers during Thursday’s Asian session, but it lacks conviction and remains below the $2,400 mark. Nevertheless, the precious metal appears to have ended a four-day losing streak and is supported by a combination of factors. Investors remain concerned about an economic slowdown in China and a possible recession in the US. This, along with geopolitical risks arising from the ongoing conflicts in the Middle East, is proving to be a key factor giving the safe-haven precious metal a tailwind.
Meanwhile, Friday’s weak US July jobs report raised expectations of major rate cuts by the Federal Reserve (Fed). This, in turn, is triggering a fresh decline in US Treasury yields, putting some downward pressure on the US dollar (USD) and further benefiting yieldless gold prices. However, the lack of strong follow-on buying warrants caution before setting up for additional gains. Meanwhile, a sustained break below the 50-day simple moving average (SMA) is needed to confirm a short-term bearish breakdown.
Daily Digest Market Movers: Gold price attracts safe inflows and is also supported by falling US bond yields
- This week’s recovery in global equity markets is losing momentum amid persistent concerns about a US recession, offering some support to the price of safe-haven gold during Thursday’s Asian session.
- There are also fears that the Iranian attack, in retaliation for the assassination of Hamas leader Ismail Haniyeh in Tehran and the subsequent Israeli response, could lead to a wider conflict in the Middle East.
- Investors have fully priced in a 25 basis point rate cut by the US Federal Reserve in September and are speculating about the possibility of a 50 basis point rate cut amid concerns about an economic slowdown in the US.
- Meanwhile, these expectations are triggering a renewed decline in US Treasury yields and capping the US dollar’s recent recovery from a multi-month low, giving further momentum to the yieldless yellow metal.
- Traders will now look to the usual weekly US initial jobless claims data due later in the day, but the focus remains on US consumer inflation figures due next Wednesday.
Technical Analysis: Gold price must overcome the supply zone of $2,410-2,412 for bulls to take control in the short term
From a technical perspective, any further positive move above the $2,400 level is likely to face resistance in the supply zone of $2,410-2,412. Sustained strength beyond this could trigger a short-covering rally and push gold prices to the intermediate hurdle of $2,430, en route to the next relevant barrier in the $2,448-2,450 horizontal zone. Some follow-on buying should pave the way for a retest of the all-time high near the $2,483-2,484 area reached in July. This is closely followed by the psychological level of $2,500, which, if overcome, should set the stage for another short-term appreciation move.
On the other hand, gold prices could continue to attract buyers around the 50-day SMA support, currently near the $2,368 region. The subsequent decline could drag the XAG/USD to last week’s swing low, around the $2,353-$2,352 zone, en route to the $2,344 area or the 100-day SMA. Some follow-through selling below the latter will be seen as a new trigger for bearish traders and pave the way for even bigger losses. Given that the oscillators on the daily chart have just started gaining negative traction, the commodity could accelerate the descent towards the $2,300 round mark.
US dollar price today
The table below shows the percentage change in the US dollar (USD) against the major listed currencies today. The US dollar was strongest against the British pound.
| U.S. dollar | EUR | British Pound | EUR | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| U.S. dollar | -0.08% | -0.02% | -0.10% | -0.20% | -0.48% | -0.04% | -0.14% | |
| EUR | 0.08% | 0.06% | 0.02% | -0.14% | -0.40% | 0.04% | -0.07% | |
| British Pound | 0.02% | -0.06% | -0.07% | -0.21% | -0.48% | -0.05% | -0.14% | |
| EUR | 0.10% | -0.02% | 0.07% | -0.13% | -0.39% | 0.00% | -0.07% | |
| CAD | 0.20% | 0.14% | 0.21% | 0.13% | -0.27% | 0.17% | 0.06% | |
| AUD | 0.48% | 0.40% | 0.48% | 0.39% | 0.27% | 0.45% | 0.34% | |
| NZD | 0.04% | -0.04% | 0.05% | -0.01% | -0.17% | -0.45% | -0.11% | |
| CHF | 0.14% | 0.07% | 0.14% | 0.07% | -0.06% | -0.34% | 0.11% |
The heatmap shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you select the US dollar from the left column and move along the horizontal line to the Japanese yen, the percentage change shown in the box corresponds to USD (base)/JPY (quote).
