The spot gold price went up during the week but fell after Friday’s US non-farm payroll report. Looking back at last week, the price broke through the 2400 resistance before the Fed—meeting on Wed. The price kept on rising after Powell’s dovish speech, and tensions rose in the Middle East as Iran’s leader ordered attacks on Israel in response to the assassination of a Hamas leader. The US released weaker-than-expected job data on Fri., causing gold prices to hit a weekly high and rechallenge the historical peak 2480. However, the market quickly focused on concerns that the US economy might enter a recession. US stocks rapidly fell from their highs, dragging gold prices down to a daily low of 2410, closing the week at 2442.
According to CME FedWatch, the latest interest rate futures indicate that the probability of a 50 basis point rate cut in September increased from 22% on Thursday to 95% early in the Monday Asian session. Whether in the gold or stock markets, a rate cut should boost the market. However, despite reaching twice above 2450 in the past month, the spot gold price didn’t have any significant new long-buying position above 2450 but profit-taking and new short-selling positions. The market now broadly expects the first rate cut to happen in September. As the first rate cut approaches, it is almost time for investors who entered long for the ‘rate cut’ concept at the beginning of the year to plan their exit. ‘Buy on the rumour, sell on the news’ ~ gold prices may still hit a new high before September, but expect a significant correction around the first rate cut!
1-hour Chart > The price still runs within the upward wedge(2). In the S-T, gold prices are supported by the trendline(2.1). If this support is broken, a significant correction may occur, with a target of 2400. Currently, the range of 2450-53 is acting as an S-T resistance zone, while stronger resistance is expected at 2478-80.
Daily Chart > No major economic data are expected to be released this week, and gold prices are unlikely to break high. The initial expectation is to work within the range of 2410-80 established last Friday.
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