Gold ends week in positive territory as investors await US inflation data

Gold rose for a second straight day on Friday, supported by expectations the Federal Reserve will ease monetary policy in September.
US economic data shows a slowdown, but not enough to raise fears of a recession.
Ongoing tensions in the Middle East between Israel, Lebanon and Iran are affecting stable demand for gold.

Gold prices rose modestly for the second day in a row as market participants believe the Federal Reserve (Fed) may start easing policy at its upcoming September meeting. That and heightened tensions between Israel, Lebanon and Iran are driving gold demand ahead of the weekend. XAU/USD is trading at $2,432, up 0.22%.

The latest round of economic data from the United States (US) showed that the economy is indeed slowing, but not enough to reignite recession fears. Fears following the dismal ISM Manufacturing PMI data and July Nonfarm Payrolls (NFP) data have begun to dissipate, and this was reflected in US stocks posting decent gains delayed in the New York session.

US jobless claims for the week ending August 3 were lower than expected on Thursday, indicating the labour market remains stable despite a moderate cool-down.

Gold prices remained steady as yields on U.S. Treasury bonds and the U.S. dollar fell. The benchmark 10-year U.S. Treasury note fell nearly five basis points to 3.944%, while the U.S. Dollar Index (DXY), which measures the greenback’s performance against other currencies, fell 0.10% to 103.13.

Analysts at ING suggest that Bullion will remain bullish for the foreseeable future. They wrote: “Looking ahead, we believe [G]“the old one should regain its footing once again, amid ongoing geopolitical uncertainty and expectations of interest rate cuts by the US Federal Reserve.”

Tensions in the Middle East will keep XAU/USD bid high, with headlines suggesting an escalation of the conflict. Reports suggest Israeli defense officials have said the military is coordinating with the Pentagon to prepare scenarios for responding to Iran and Hezbollah.

Meanwhile, traders are gearing up for next week’s data. The U.S. economic calendar will be crowded, with traders focusing on producer and consumer inflation data, retail sales, building permits and consumer sentiment.

Daily Market Factors Review: Gold Rising Despite China’s Lack of Buying

The producer price index is expected to decline from 0.2% to 0.1% MoM in July.
The Consumer Price Index (CPI) is expected to fall from 3% y/y to 2.9%; the core CPI should continue its downward trend from 3.3% to 3.2% y/y.
Economists expect US retail sales to grow from 0% to 0.3% month-on-month.
The price of the gold bullion rose despite reports that China’s central bank refrained from buying gold for the third month in a row.
The CME FedWatch tool shows that the probability of the Fed cutting interest rates by 50 basis points at its September meeting is 52.5%, up from 57.5% a day earlier.

Technical Analysis: Gold Price Consolidates Around $2,430

Gold’s uptrend continues, although it is encountering resistance near $2,430, with buyers unable to break through this area before the psychological $2,450 level. The Relative Strength Index (RSI) shows that buyers are gaining momentum, which means higher prices are in the cards.

If buyers push prices above $2,450, the next stop would be the August 2 high at $2,477, before testing the all-time high at $2,483. With further gains, $2,500 is within reach.

On the other hand, a break below the 50-day basic moving average (SMA) at $2,370 could intensify the decline, leading to the 100-day SMA at $2,349 and then the support trend line at $2,320. If this level is broken, the next support comes in at $2,300.