Gold prices rose on Wednesday as investors bet on potential US interest rate cuts. The precious metal was going for $2,354 per ounce at the spot market, with the price having risen by 0.8 percent in the intraday session. It was up by a similar margin in the futures market, where it sold for $2,353 per ounce. There are a series of high-impact US economic data in the pipeline this week, but traders will likely ignore most of them and focus on the comments by Fed Chairman Jerome Powell, FOMC Meeting Minutes and the June Non-Farm Payrolls figures.
Federal Reserve Chairman Jerome Powell stated on Tuesday that the US inflation on the downward trajectory, raising hopes that the Fed could initiate interest rate cuts in September. The dovish comments will bring tailwinds to gold price as the market awaits Thursday’s release of June FOMC Meeting Minutes. In the intervening period, XAUUSD could get some volatility from the S&P Global US Services PMI figures. Also, the US dollar will be under pressure after the US Initial Jobless Claims figures came in at 238k, beating the forecast 234k for the week ending June 27.
Also, political developments in Europe could inject fresh impetus later this week. The UK will go to the polls on July 4, in an election that the Labour party is projected to win by a wide margin. Similarly, France is preparing for a likely far-right policy, with Marine Le Pen-led National Rally party tipped to control the parliament. The French elections are particularly impactful, as they could have far-reaching implications on France’s national debt policy. Such disturbances could create jitters around European economies, thus favouring safe haven gold.
Technical analysis
The momentum on the gold price signals a continuation of the current upward momentum if the price stays above 2,340. With the buyers in control, the first resistance will likely be encountered at 2,348, but a breach of that level could strengthen the upward momentum to test 2,360. On the other hand, a move below 2,340 will favour the sellers to take control, with the first support likely to come at 2,332. A breach of that support will not only invalidate the upside narrative, but also strengthen the downside momentum to potentially test 2,325.
