Key points:
Gold prices (Symbol: XAUUSD) traded in a flat momentum following a sharp decline in the previous session, as recent US inflation data tempered expectations for a more aggressive rate cut from the Federal Reserve. Spot gold hovered around $2,448.49 per ounce, nearly unchanged from the previous trading day.
XAUUSD prices flat as rate cut hopes dim on US inflation data, as observed on the VT Markets app.
On a technical analysis front, the 15-minute chart for XAUUSD (Gold) shows a recovery after a sharp decline earlier in the session, where the price dropped to a low of 2438.13. The price has since rebounded, closing at 2457.18, just below the resistance level of 2457.25. The EMA (24, 24, 72) lines are currently converging, indicating potential for further upside if the price can maintain above the 2457 level.
The MACD histogram is positive, signaling increasing buying momentum, which supports the likelihood of continued recovery. However, traders should watch the resistance near 2460 for any potential reversals or consolidations.
The release of the US consumer price index (CPI) data for July showed a moderate increase in prices, aligning with market expectations.
The annual inflation rate fell below 3% for the first time since early 2021, providing the Federal Reserve with more room to consider cutting interest rates. However, the likelihood of a substantial 50-basis-point cut in September has decreased, with market odds dropping from 50% to 36%, according to the CME FedWatch Tool.
Gold, which tends to benefit from a low interest rate environment due to its non-yielding nature, struggled to find upward momentum in light of these developments.
The market is currently focused on the upcoming US retail sales and initial jobless claims data, which are expected to provide further insight into the strength of the US economy and the Federal Reserve’s potential policy direction.
Trading opportunities and setups in gold
The recent inflation data suggests that while a rate cut in September is likely, it may not be as deep as previously anticipated.
This scenario could lead to range-bound trading in gold prices as traders weigh the potential for further rate cuts against the ongoing economic data releases. Monitoring US retail sales and jobless claims closely will be crucial for making informed trading decisions in the short term.
