Gold Prices Soar Following Soft US Data

Gold prices surged over 1% on Wednesday due to weak US economic data and rising Fed rate cut expectations. The latest FOMC meeting minutes showed that “several participants” were ready to lift rates if inflation remained elevated.

The Institute for Supply Management (ISM) shows contracting US services activity, while labor market data reveals higher unemployment claims and decreased private hiring. The US business activity in the services sector contracted after hitting its highest level since August 2023, according to the Institute for Supply Management (ISM).

This and weaker jobs data, as the number of Americans filing for unemployment benefits rose and private companies hired fewer workers than foreseen, sparked a repricing of Fed interest rate cuts.

Gold price uptrend is set to continue and is testing the neckline of a Head-and-Shoulders chart pattern that has emerged since April 2024. The overall trend is bullish and intact, with the Relative Strength Index (RSI) being bullish.

If gold clears the pattern’s neckline, it would sponsor a leg up to $2,400 and invalidate the Head-and-Shoulders chart structure, paving the way for further gains and exposing the year-to-date high of $2,450. Conversely, if sellers push the spot price below $2,350, further downside is seen near $2,300.