On Friday, July 12th, the gold price remained above the key point of $2,400 per ounce, with a 1% increase in the gold price for the week, and a third consecutive weekly increase. This is due to weak US inflation data and increasing investor confidence in the Fed's upcoming rate cuts, which boosted the bullish buying sentiment for gold and helped keep gold stable at the $2,400 mark.
Following the release of weak consumer price index data last Thursday, the US producer price index posted a moderate increase on Friday, further confirming the downtrend in inflation and strengthening the rationale for a rate cut in September. According to the CME Group's FedWatch Tool, the market now believes that the possibility of a rate cut in September has risen to 94%, and the expectation for a rate cut in September has been almost fully priced in. Although last Friday's producer price index slightly reduced some of the momentum of gold's rise, gold was still able to hold the key support level of $2,400 per ounce. For some analysts, this is a strong sign that gold's consolidation phase is coming to an end. Last week, Fed Chairman Jerome Powell made relatively dovish comments, and with consumer price index (CPI) inflation lower than expected, gold received a new bullish signal. Robert Minter, ETF strategy director at abrdn, said that these two factors have given gold the upward invitation it has been waiting for. Minter added that with the labor market slowing down, the Fed needs to take immediate action to avoid getting into more trouble. "The rationale for a rate cut in September is very strong," he said. "If you look at how high consumer debt is, you'll find that the labor market doesn't need much pressure to bring some real problems to the economy. I don't think we'll see a recession, but it all depends on the Fed. They took action a little late, but not too late." The most noteworthy data to be released this week is US retail sales data for June, economists pointed out that if consumption continues to weaken, it will undoubtedly intensify market expectations of a rate cut by the Fed. This may also be beneficial for gold to continue to set new historical highs.
Source: E-huitong
On a technical level, from the daily chart, after the gold price rebounded above the 60-day moving average resistance, the trend remained stable above this level, indicating a good prospect for a bullish trend. Short-term risks may still exist for a retracement of the $2,400 level, and if it can hold above this level without breaking through, there is the potential for further upward momentum. The key levels to watch are support levels near $2,402 and $2,395, and resistance levels at $2,415 and $2,423.
Wang Gang, Bank of China Guangdong Branch
For personal views only, not representative of the views of the organization.