Market Analysis

Gold prices (XAU/USD) are consolidating within a narrow range early in the European session on Friday, stabilizing near a two-week high around $2,360-2,365. This follows a significant upward movement in the previous session. US Treasury bond yields are on the rise, anticipating new supply next week, which is viewed as a potential deterrent for the commodity.

 However, softer US economic data released on Thursday has reinforced expectations for the Federal Reserve to begin cutting interest rates later this year. This lack of support for the US Dollar (USD) could benefit gold as a non-yielding asset.

The Bank of England's (BoE) dovish stance on Thursday has increased speculation of an interest rate cut in August. Additionally, recent actions by the European Central Bank (ECB) and the Swiss National Bank (SNB), including rate cuts, continue to influence market sentiment. Thursday's breakout above the 50-day Simple Moving Average (SMA) signals a bullish sentiment among traders, suggesting potential further gains for gold. Corrections in price are likely to be viewed as buying opportunities, with attention turning to global PMI data for market direction.

Technical analysis points to continued upside potential for gold, with the recent close above the 50-day SMA seen as a bullish signal. Positive momentum indicators on the daily chart support further upward movement, possibly targeting resistance near the $2,378-2,380 range and potentially aiming for the $2,400 level.

On the downside, immediate support is expected near the 50-day SMA around $2,345-2,344, followed by the $2,336-2,335 area. A break below these levels could expose lower supports at $2,300 and $2,285. A more significant decline would revisit the retracement from May's all-time high, potentially testing levels around $2,254-2,253.

Paraphrasing text from "FX Street" all rights reserved by the original author.