Gold price recovered from Monday’s downturn to register gains on Tuesday, as the market turned its focus on an impending Fed interest slash. The yellow metal traded at $2,289 per ounce, up by 0.2 percent in Tuesday’s intraday session at the spot market, reversing the 0.1 percent decline recorded on Monday.
The Federal Open Market Committee (FOMC) will meet on Wednesday to deliberate on US interest rate direction. However, the market is betting on the first cut to come in September, with the FOMC news conference expected to provide hints on the number of rate cuts for the remaining part of the year. That is expected to keep gold price under pressure in the coming days.
On the other hand, gold gets a breather following an announcement by Israel that its retaliation against Hezbollah would seek to avoid drawing the wider Middle East into the conflict. Israel had vowed a strong response to Hezbollah’s deadly attack that left 12 children dead over the weekend, raising the geopolitical premium on safe haven gold.
On the 2-hour chart, the XAU/USD pair looks headed to the upside under marginal bullish control. The 20-period Simple Moving Average (SMA) has recently crossed above the 50-period SMA, signaling control by the buyers. The 20-SMA is currently at $2,388, making that a critical support level. Furthermore, the RSI is at 53 as of this writing, which also points to a likely continuation of the upside.
Gold price signals control by the buyers if it stays above the $2,386 pivot mark. With the buyers in control, the upside will likely encounter the first resistance at $2,393. However, extended control by the buyers could break that mark and strengthen the upside to take XAU/USD to test the next resistance at $2,400. On the other hand, a move below $2,386 will signal control by the sellers. The downside movement will likely find the first support at $2,381, but extended control could break that mark and invalidate the upside narrative. Furthermore, it could strengthen the downward momentum to test $2,375.
This post was last modified on Jul 30, 2024, 12:24 BST 12:24