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During Wednesday's trading session, the Gold price declined below the $2,500 per ounce level. Losses extended to the support level of $2,493 per ounce before quickly recovering to stabilize around the $2,508 per ounce level at the beginning of trading today, Thursday. Furthermore, the limited selling of gold came as investors awaited new signals about the extent of the impending interest rate cut by the US federal Reserve. financial markets are looking to a series of economic data this week, including the Personal Consumption Expenditures index, the Federal Reserve's preferred inflation measure, and the second estimates of second-quarter GDP figures.
Currently, Traders are pricing in a 71% chance of a 25-basis point cut in US interest rates and a 29% chance of a larger 50 basis point cut in the widely expected September rate cut, according to the CME FedWatch tool. In addition, financial markets are pricing in a total of 100 basis points of rate cuts for the rest of the year, which would reduce the opportunity cost of holding non-interest-bearing assets. Dovish comments from Federal Reserve officials, who have highlighted the growing risks to the Labor market while expressing confidence that inflation will return to target, have supported these expectations.
Elsewhere, the safe-haven appeal of gold has been bolstered by rising tensions in the Middle East.
As for the factors affecting the gold market, the US dollar hovers near a 13-month low. Also, the US dollar index DXY traded around 100.6 on Wednesday, hovering near its lowest since July 2023 as the prospect of a rate cut by the Federal Reserve continued to weigh on the currency. Markets are pricing in a one-third chance that the central bank will cut rates by 50 basis points in September, adding to the total easing of more than 100 basis points this year. These expectations were reinforced by cautious comments from Federal Reserve officials who warned of growing risks to the labor market, while signaling confidence that inflation will return to target. Now, investors look ahead to the latest initial jobless claims and the Fed's preferred personal consumption expenditures price index report later this week for further clarity on the path of interest rates.
According to Forex trading, the US dollar suffered losses against most major currencies and fell to a two-and-a-half-year low against the British pound.
On the stock trading front, US stocks fell on Wednesday as investors prepared for Nvidia's highly anticipated earnings report, which is expected to weigh heavily on the technology sector and the broader market. According to trading, the S&P 500 fell 0.6%, the Nasdaq fell 1.1%, while the Dow Jones lost 159 points. Most sectors ended in the red, with the technology sector leading the decline with a 2.1% drop in Nvidia shares, as traders speculated on a potential 10% volatility in its stock price after earnings. Consumer discretionary also lagged, with Tesla and Amazon both down more than 1.3%.
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In corporate news, Super Micro Computer Inc. dropped 19% after announcing a delay in filing its annual report. In contrast, Nordstrom shares rose 4.2% on second-quarter earnings, and Ambarella shares jumped 10.6% on strong third-quarter revenue guidance. Also, investors are closely watching earnings reports from major companies such as Nvidia, Salesforce, CrowdStrike, HP and Affirm Holdings, which are due after the market close Price Forecast and Analysis Today:
So far, the overall trend, according to today's gold analysts, remains upward, and the stability above the historical resistance of $2,500 per ounce confirms the strong control of bulls and, at the same time, pushes technical indicators towards strong overbought levels. With the continued weakness of the US dollar and increasing global geopolitical tensions, the possibility of moving towards stronger new peaks cannot be ruled out, with the closest being $2,526, $2,540, and $2,565 per ounce, respectively. A reversal of the trend and strong selling to take profits will not occur without a recovery in the US dollar and a de-escalation of global geopolitical tensions.
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