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Gold prices experienced a surge on Tuesday as investors eagerly awaited the release of crucial US economic data and the first presidential debate in the course of the 2024’s US elections. The precious metal gained momentum as the US dollar weakened and Treasury yields declined, reflecting market expectations for a potential Federal Reserve interest rate cut.
Economic Indicators, Market Sentiment
The market mood turned slightly positive as traders anticipated that the upcoming Consumer Price Index (CPI) report would support the Federal Reserve’s dovish stance on monetary policy. The recent jobs report, while showing a slower-than-expected increase in employment, also indicated a decline in the unemployment rate, easing concerns among policymakers.
Swaps markets are now pricing in a higher probability of a 50-basis-point interest rate cut at the Federal Reserve’s September meeting, alongside the more likely 25-basis-point reduction. This shift in expectations reflects growing optimism among economists about the Fed’s willingness to ease monetary policy to support economic growth.
Political Developments and Market Dynamics
Political developments are also set to influence market sentiment ahead of the US presidential election. The first debate between Vice President Kamala Harris and former President Donald Trump will take place on Tuesday evening, potentially impacting investor confidence.
Geopolitical Factors
Geopolitical tensions and uncertainties have further fueled demand for gold as a safe-haven asset. The ongoing trade disputes between the United States and China, the geopolitical tensions in the Middle East, as well as the geopolitical crisis in Eastern Europe, and other global events have created a sense of unease and uncertainty among investors. In such environments, gold is often seen as a reliable store of value, providing a safe haven from market volatility.
Technical Factors
From a technical perspective, gold prices have been steadily rising, but have yet to break above the all-time high of $2,531. The Relative Strength Index (RSI) indicates that the price is likely to remain sideways in the near term. At the time of writing, gold is trading at $2517.13 per ounce
If gold prices can surpass the all-time high, the next resistance level is at $2,550, followed by the psychological barrier of $2,600. However, if the price falls below $2,500, support levels are at $2,470 and $2,450.
Gold prices have experienced a significant increase as investors anticipate a potential interest rate cut by the Federal Reserve and await the release of crucial economic data. The upcoming presidential debate will also play a role in shaping market sentiment. While the technical outlook for gold remains positive, investors should closely monitor economic indicators and political developments to assess the potential impact on the precious metal’s price.
