GOLD Shines Bright: XAU/USD Poised for Continued Appreciation

In a notable rally, the price of gold has climbed to a four-week high, exhibiting strong potential for further appreciation. This surge is supported by the softer US CPI data, which has reinforced market expectations that the Federal Reserve will only implement one more interest rate hike this year.

Adding weight to the positive outlook, the US dollar continues to languish near a 15-month low. As a result, bets are being placed on the Fed concluding its rate-hiking cycle, a development that benefits the gold price.

The recent release of consumer inflation figures from the US has solidified expectations that the Fed will maintain interest rates following a 25 basis points increase during the upcoming July 25-26 policy meeting. The US Bureau of Labor Statistics reported a 0.3% rise in the headline Consumer Price Index (CPI) for June, while the yearly rate slightly decreased to 3% from the previous 3.1%. Notably, core prices experienced their smallest monthly increase since August 2021, and the annual US core CPI decelerated to 4.8%, marking the slowest growth in over two years. These factors, coupled with signs of a cooling US labor market, suggest that the Fed may adopt a more dovish stance, benefiting the non-yielding gold price.

Traders are now closely monitoring upcoming US macroeconomic data, including the Producer Price Index (PPI) and Weekly Initial Jobless Claims, which are expected to influence the dynamics of the US dollar and provide further impetus to the gold price. However, given the prevailing fundamental backdrop, which favors bullish sentiment, the XAU/USD pair is expected to maintain an upward trajectory as the path of least resistance. Any intraday corrective declines are likely to be viewed as buying opportunities and are anticipated to be limited, at least for the time being.


Pivot Point: 1940.00

Our preferred Scenario:

Long positions above 1940.00 with targets at 2000.00 & 2035.00 in extension.