Market Analysis

Bulls in the gold price stay put ahead of the important publication of US inflation data

Amos Simanungkalit · 14 Aug150.9K Views

Gold prices (XAU/USD) continued to face selling pressure for the second consecutive day on Wednesday, pulling further away from the monthly peak tested earlier in the week. A generally positive sentiment in the equity markets has reduced demand for the safe-haven metal, although geopolitical tensions from ongoing conflicts in the Middle East have helped limit the decline.

Additionally, expectations of more significant interest rate cuts by the Federal Reserve (Fed), reinforced by signs of moderating inflation, provide support for the non-yielding Gold price. Traders, however, appear cautious about making aggressive directional bets and are likely waiting for more clarity on the Fed's policy direction. As such, market attention remains focused on the upcoming US consumer inflation data.

Technical Analysis: Gold price outlook remains bullish, potential retest of all-time high

From a technical standpoint, the recent rebound from the 50-day Simple Moving Average (SMA) support and the positive momentum indicators on the daily chart suggest a bullish bias. Consequently, any significant decline is likely to be viewed as a buying opportunity, keeping losses contained. Gold appears positioned to retest the all-time high around the $2,483-$2,484 zone, with an eye on breaking through the $2,500 psychological barrier. Sustained strength beyond this level could signal a fresh breakout from the broader trading range of the past month, paving the way for further near-term gains.

On the downside, the $2,450-$2,448 resistance now acts as a key support level. A break below this could see Gold prices retreat to the weekly low in the $2,424-$2,423 range, touched on Monday. The next significant support is located near the $2,412-$2,410 area, followed by the $2,400 round number. Failure to hold these support levels could make XAU/USD vulnerable to a test of the 50-day SMA support near the $2,378-$2,379 region. Continued selling pressure may shift the market sentiment in favor of the bears, exposing the 100-day SMA support around the $2,358-$2,357 zone. This is closely followed by the late July low of approximately $2,353-$2,352, a break of which could lead to further declines.