Gold (XAU/USD) is currently trading within the familiar $2,320-$2,330 range, just below the 50-day Simple Moving Average (SMA). This consolidation phase could be an accumulation period for investors positioning for another rally, as numerous global factors continue to support gold’s long-term bullish outlook.
Geopolitical Tensions Fuel Safe-Haven Demand
Unresolved geopolitical conflicts, a potential political shift to the right in Europe, concerns about the US under a potential Trump presidency, and growing East-West divisions are amplifying risks to global trade and stability. As a traditional safe-haven asset and a potential alternative to the US Dollar’s dominance, gold is gaining prominence in this evolving world order.
Fed’s Cautious Stance Creates Uncertainty
The Federal Reserve’s (Fed) reluctance to commit to a timeline for interest rate cuts is creating uncertainty in the gold market. While recent US Personal Consumption Expenditures (PCE) data showed a decline in inflation, Fed officials remain cautious, emphasizing the need for further evidence before easing monetary policy. This indecision is contributing to gold’s range-bound trading.
Market Focus on Fed Speak and US Jobs Data
Market participants are keenly awaiting further commentary from Fed Chair Jerome Powell and the release of key US jobs data, including JOLTS Job Openings and Nonfarm Payrolls. These events could offer clues about the Fed’s future policy direction and significantly impact gold prices.
Technical Analysis: Gold Consolidates Below 50-Day SMA
Gold’s price action is currently consolidating below the 50-day SMA. While a recent breakout above a descending trendline invalidated a bearish Head-and-Shoulders pattern, the subsequent pullback suggests a potential sideways trend in the short to medium term.
Key Levels to Watch:
- Resistance: $2,340 (50-day SMA and trendline), $2,369 (June 21 high), $2,388 (June 7 high)
- Support: $2,279 (neckline of the invalidated H&S pattern), $2,171 (0.618 Fibonacci retracement), $2,105 (full H&S pattern target)