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Gold Breaks Out
Gold prices were seen trading up to fresh record highs through early European trading today, before softening mid-morning amidst an uptick in USD. The outlook for gold at the start of the week remains firmly bullish against a backdrop of stronger Fed easing expectations and heightened geopolitical uncertainty linked to the conflict in the Middle East.
Fed Easing Expectations Support Gold
Gold prices have been well bid over the last week, helped on by the Fed’s half-point rate-cut last week and dovish revisions to its dot-plot forecasts. With traders now widely expecting the Fed to press ahead with at least one further cut this year, potentially two, USD looks vulnerable to further downside in coming months, which should keep gold prices supported near-term.
Middle East Fears
On the geopolitical side, markets remain highly fearful of a broader conflict developing in the Middle East after continued Israeli airstrikes on Hezbollah positions in Lebanon. Concerns that a ground invasion could emerge also risks the prospect of a renewed Iran-Israel conflict. As such, gold prices are vulnerable to fresh rallies on any headlines pointing to an escalation of violence in the region.
US Data on Watch
Looking ahead this week, gold traders will be eyeing the next round of US data points with any fresh weakness likely to catapult gold higher near-term. Today, the latest US PMIs will be closely watched with both readings expected to drop further. Later in the week, GDP, unemployment claims and core PCE will be watched, along with comments from Fed’s Powell who speaks on Thursday.
Technical Views
Gold
The rally in gold prices has seen the market breaking out above the bull channel highs and above the 2,530.59 level. While price holds above here and with momentum studies bullish, the focus is on a continued move north. To the downside, 2,483.27 will be the next support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.