{"id":67442,"date":"2023-08-01T16:13:17","date_gmt":"2023-08-01T13:13:17","guid":{"rendered":"https:\/\/ironfx-com-php8.wp-dev.int.theitops.net\/?p=67442"},"modified":"2024-08-26T14:37:31","modified_gmt":"2024-08-26T11:37:31","slug":"sideways-motion-maintained","status":"publish","type":"post","link":"https:\/\/www.smartchinaeducation.com\/ph\/sideways-motion-maintained\/","title":{"rendered":"Sideways motion maintained"},"content":{"rendered":"

Gold seems<\/a> to have maintained a sideways motion with the main body of prices being contained in the $1950-$1972 range. Overall we tend to maintain the view that the negative correlation of the USD with gold\u2019s price seems to be maintained and may be the main factor behind the movement of gold\u2019s price. In this report, we aim to shed light on the catalysts driving gold\u2019s price, assess its future outlook and conclude with a technical analysis.<\/p>\n\n\n\n

Minor boost from the Fed\u2019s interest rate decision<\/strong><\/h2>\n\n\n\n

On Wednesday, gold\u2019s price tended to gain somewhat, yet the effect of the Fed\u2019s interest rate decision remained rather modest. The Fed as was expected delivered the 25 basis points rate hike yet provided little new for market participants. In its accompanying statement, in our opinion, the bank seems to have removed its predisposition for more rate hikes and is now more data-dependent. It\u2019s as if the bank accepts that it has reached the end of its rate hiking cycle yet at the same time keeps the door open for another rate hike in the September meeting if necessary. The release overall was viewed as leaning towards the dovish side and tended to weaken the USD yet at the same time strengthen gold as mentioned before.<\/p>\n\n\n\n

Acceleration of US GDP Rate hits gold\u2019s price<\/strong><\/h2>\n\n\n\n

Yet the main fluctuation of gold\u2019s price in the past week may have been caused by the release of the preliminary US GDP advance rate for Q2. The rate accelerated instead of dropping as expected, highlighting the resilience and the prospects of the US economy, easing market worries about the outlook of the US economy and enhancing the possibility of a soft landing. At the same time, the weekly initial jobless figure came in lower than expected, implying that the US employment market may not be as loose as expected. Both financial releases, but primarily the former tended to provide a bullish boost to the greenback and weaken gold\u2019s price.<\/p>\n\n\n\n

Easing of inflationary pressures and the role of US yields<\/strong><\/h2>\n\n\n\n

On Friday, fresh data showed that inflationary pressures continued to be on the retreat in June. The release of the Core PCE Price index rate, the Fed\u2019s favorite inflationary measure, slowed down beyond market expectations, reaching 4.1% yoy, while the headline PCE price index also slowed down, both stocking market expectations for the Fed to halt its rate-hiking path as on Wednesday\u2019s interest rate decision the Fed stated that \u201cThe Committee\u2019s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments\u201d.<\/p>\n\n\n\n

Hence the release tended to weaken the USD and at the same time support gold\u2019s price. The scenario of the Fed halting its rate hiking path, if combined with the stronger preliminary GDP rate for Q2, enhanced the market\u2019s expectations that the US economy will be able to avoid a recession.<\/p>\n\n\n\n

The role of US yields and risk events ahead<\/strong><\/h2>\n\n\n\n

It should be noted that given the above analysis, the acceleration of the GDP advance rate for Q2 and given that market worries for a possible soft landing of the US economy, may have been enhanced, the yields of US bonds tended to retreat, which more or less tended to enhance the attractiveness of the precious metal. In the coming days, we expect fundamentals to play a key role regarding gold\u2019s price yet at the same time we note that there are key releases that could influence gold\u2019s direction.<\/p>\n\n\n\n

We note today the release of the US ISM manufacturing PMI figure for July, on Thursday we get the weekly initial jobless claims figure and the factory orders growth rate for June and we highlight the release of the US employment report for July on Friday and should the data show that the US employment market remains tight and provides support to the USD, we may see the release weighing on gold and vice versa.<\/p>\n\n\n\n

Teknikal na Pagsusuri<\/strong><\/h2>\n\n\n\n

XAUUSD H4 Chart<\/em><\/strong><\/h3>\n\n\n\n
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