Gold price gains ground near all-time high, amid geopolitical risks, Fed bets cut rates

• Gold price extends rally in early Asian session on Wednesday.
• The deterioration of the situation in the Middle East and the favorable attitude of the Fed underpins the price of gold.
• Traders await speeches from Waller and Bostic from the Fed on Wednesday.

The price of gold (XAU/USD) rose above $2,500 per troy ounce on Wednesday, supported by escalating geopolitical tensions in the Middle East. Additionally, US Federal Reserve (Fed) Chairman Jerome Powell’s speech at the Jackson Hole Symposium last week, signaling “the time has come” to start cutting interest rates, supports the precious metal as it lowers the opportunity cost of holding non-performing assets. I pay interest. .

Investors will take more cues from Wednesday’s speeches from Fed Fed Christopher Waller and Raphael Bostic for some clues about the trajectory of US interest rates. Attention will turn to preliminary annualized second quarter (Q2) Gross Domestic Product (GDP) and Personal Consumption Expenditure (PCE) – Price Index data, which will be released on Thursday and Friday respectively. Better-than-expected results could lift the US dollar (USD) and limit upside for USD-denominated gold prices.

Daily Digest Market Movers: Gold price remains strong near record high

• Thousands of soldiers from the special forces have mobilized for a large-scale operation in the northern West Bank, which is expected to last several weeks. The report says the army has carried out the largest military operation in the West Bank since 2002, and the operation will continue for several days.
• “The prospect of lower interest rates also attracts investors. Gold ETF holdings rose 15 tonnes last week to a six-month high, according to Bloomberg. Speculative interest is particularly strong. Speculative investors’ net long position rose to about 193,000 contracts in the week to August 20, while gold hit an all-time high, the highest level in nearly four and a half years,” observed Carsten Fritsch, strategist of goods of Commerzbank. .
• The Conference Board’s US consumer confidence index improved to a six-month high, rising to 103.3 in August from an upwardly revised 101.9 in July.
• The U.S. home price index fell 0.1% month-on-month in June, below the market consensus of a 0.2% rise, the Federal Housing Agency showed on Tuesday.
• According to the CME FedWatch tool, rate futures markets have fully discounted a 25 basis point (bps) rate cut in September, while the possibility of a deeper rate cut is 34.5%. Traders see the Fed tapering 100 basis points this year.

Technical Analysis: Gold price maintains long-term bullish vibe

The price of gold rises higher that day. The precious metal remains covered below the upper limit of the five-month-old ascending channel and record high. A broader positive outlook for the yellow metal remains unchanged as it holds above the 100-day exponential moving average (EMA) on the daily chart. The upward momentum is supported by the 14-day Relative Strength Index (RSI), which is above the median line near 64.70, asserting continued bullish pressure in the near term.

The key resistance level for XAU/USD appears at $2,530, representing the confluence of the all-time high and the upper limit of the trend channel. A bullish breakout above this level could make a play for the $2,600 psychological barrier.

On the downside, the initial support level is seen at the $2,500 round figure. A breach of said level could lead to further losses near $2,470, the August 22 low. The next level of contention to watch is $2,432, the August 15 low.