Analyzing Gold’s Uptrend and Correction | Fed's Influence | Fundamentals of XAUUSD

Gold extended its short-term uptrend yesterday, bringing the price close to the Target Zone of 2425. Currently, gold is beginning a correction phase. If the price reaches the support zone of 2374 - 2369 during this correction, traders might consider entering long positions with the main target set at yesterday’s high.

Should the asset break through this initial support, the correction is likely to extend to the support zone of 2349 - 2342, marking the boundary of the current trend. At this level, long trades can also be considered.

Market Reactions to US Economic Data and Fed Rate Cut Speculations

Markets have absorbed the latest US economic data, which significantly impacts gold prices. With recent statistics, there is growing speculation that the Federal Reserve may cut the federal funds rate in September. The likelihood of a rate cut has surged to 93% following a slowdown in the labor market and inflation in June. This development caused Treasury yields and the US dollar to tumble. However, a sell-off in tech stocks, as investors reallocated their portfolios, prevented the EURUSD pair from stabilizing at 1.09.

Federal Reserve Chair Jerome Powell has commented that the Fed does not need to wait for inflation to fall to the 2% target before taking action. Waiting too long could be detrimental. Powell praised the May CPI and PCE reports as positive, noting that the June report was even more encouraging. For the first time since the pandemic, consumer prices declined on a month-over-month basis, with the smallest annual increase of 3% since March 2021. Out of 71 experts surveyed by Bloomberg, only four predicted a monthly core inflation growth of 0.1%, while the majority expected higher figures.

Summary:

Gold’s short-term uptrend continues, with key support levels providing potential trading opportunities. The market has digested recent US economic data, raising the likelihood of a Federal Reserve rate cut in September. Jerome Powell’s comments on inflation and the positive economic indicators further influence market dynamics and gold prices.