Market Analysis

The price of gold drops below $2,420, marking a new daily low, as demand for safe haven assets declines

Amos Simanungkalit · 09 Aug 2024148.3K Views

Gold price (XAU/USD) continues its intraday decline as it approaches the European session on Friday, hitting a fresh daily low around the $2,418-$2,417 region in the last hour. The decline follows Thursday's strong US labor market data and Friday's better-than-expected Chinese inflation figures, which have boosted investors' appetite for riskier assets. This shift in sentiment is reflected in the generally positive tone across global equity markets, weighing on demand for the safe-haven metal.

However, the downside for Gold remains limited due to ongoing geopolitical tensions in the Middle East, which could temper market optimism. Additionally, increasing expectations for more substantial interest rate cuts by the Federal Reserve in September have led to a fresh decline in US Treasury bond yields. This has pulled the US Dollar (USD) back from the weekly highs it reached on Thursday, helping to limit further losses in XAU/USD.

Technical Analysis: Gold price setup hints at potential dip-buying opportunities

From a technical standpoint, the recent rebound from the 50-day Simple Moving Average (SMA) support, followed by an upward movement, suggests a favorable outlook for bullish traders. Additionally, daily chart oscillators are regaining positive momentum, indicating that the path of least resistance for Gold may be upward. This suggests a potential rally towards the next key resistance near the $2,448-$2,450 region. If this level is breached, momentum could drive the price further towards the all-time high around $2,483-$2,484, reached in July. A decisive break above the psychological $2,500 mark could pave the way for a continued near-term upward move.

On the downside, the $2,412-$2,410 area, previously a resistance, now serves as immediate support, just ahead of the $2,400 level. Any further decline is likely to attract dip-buying interest and should find support near the 50-day SMA, currently around the $2,372-$2,371 region. This area is a crucial pivot point; a drop below it could lead to a retest of last week's swing low near the $2,353-$2,352 zone. Failing to hold these support levels could shift the bias towards bearish traders, potentially exposing the 100-day SMA support around the $2,342 mark.