Gold Price Takes Another Shot At ATH As Safe Haven Purchases Provide Fuel

Summary:
• Gold price could break its most recent all-time-highs, with investors predisposed to ignore economic data in favour of interest rate slash.

Gold price recovered on Thursday, rising by 0.1 percent to trade at $2,464 per ounce at the spot market. The yellow metal followed the same trajectory in the futures market, with the COMEX data showing an intraday gain of 0.2 percent, and the price at $2,466 per ounce. Increased focus on likely US interest rate cut in September has mounted pressure on the dollar, with safe haven investors growing their appetite for gold.

Gold hit an all-time high of $2,483 at the spot market on Wednesday, and could breach that in Thurday’s trading if it maintains its current momentum. Gold has regained its lustre over the US dollar as declining inflation rate and soft economic data solidify prospects of the first Fed interest rate cut in September. Furthermore, yields on US treasuries have declined significantly in recent days, making non-yielding gold more attractive. Returns on benchmark 10-year US treasury bonds stood at 4.183 percent at the time of writing.

The bets for a Fed interest rate cut outweigh other economic fundamentals. For instance, the market ignored better-than-expected US Retail Sales data released on Tuesday and forecast-beating Housing sector figures released on Wednesday. Therefore, the trend is likely to continue on Thursday with the release of Initial Jobless Claims figures. 

Furthermore, economic slowdown in China may trigger an increase in demand for safe haven gold. The world’s second-largest economy experienced a slower economic growth of 4.7 percent in the second quarter, down from the first quarter’s growth rate of 5.3 percent and missing the government’s growth target of 5 percent. China central bank halted its 18-month gold buying spree in June, but sustained decline in the dollar’s strength could trigger an upturn in gold purchases.

Technical analysis

God price is currently on a bullish momentum, which will likely see the buyers stay in control if the price stays above the 2,462 pivot mark. The upside will likely meet the first barrier at 2,468, but extended control by the buyers could breach the mark and strengthen the upside push to test 2,473. However, a move below 2,462 will favour the sellers to take control, with the first support likely to be established at 2,457. A breach below that mark will invalidate the upside narrative, and potentially strengthen the downside momentum to test 2,452.