Gold Price Gains Momentum as Traders Await US GDP Data

Gold prices (XAU/USD) are recovering on Thursday, bouncing back from weekly lows in the sub-$2,500 region per troy ounce. The potential for US interest rate cuts is boosting gold demand, as lower interest rates decrease the opportunity cost of holding non-yielding gold. Political uncertainty in the US, geopolitical tensions in the Middle East, and global economic concerns further support the precious metal’s upward movement.

However, renewed demand for the US Dollar (USD) could weigh on gold prices, as a stronger USD makes gold more expensive for international buyers. Investors are closely watching the second estimate of US Gross Domestic Product (GDP) for the second quarter (Q2) on Thursday for clues on the size and pace of potential Federal Reserve (Fed) rate cuts. Additionally, the US Personal Consumption Expenditures (PCE) Price Index data for July, due on Friday, will be a key focus.

Daily Digest Market Movers: Gold Price Holds Strong Amid Rising Rate Cut Expectations

Emerging markets, particularly China, India, and Turkey, are expected to continue driving demand for gold, according to John Reade, Chief Market Strategist at the World Gold Council. “US data has failed to give gold any further lift, so the temptation for traders to book some profit after a long run has been rising,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S.

The second estimate for US Q2 GDP growth is expected to show a 2.8% increase. Meanwhile, the headline PCE Price Index is anticipated to rise by 2.6% year-over-year in July, up from 2.5% in June, with core PCE inflation projected to increase from 2.6% to 2.7% year-over-year. The rate futures markets have fully priced in a 25 basis point (bps) rate cut in September, with a 36.5% chance of a deeper cut, according to the CME FedWatch Tool. Traders are expecting a total of 100 bps in Fed easing this year.

Technical Analysis: Gold Price Shows Bullish Outlook Long-Term

Gold prices are trading positively on the day, remaining just below the five-month-old ascending channel’s upper boundary and the all-time high. The overall outlook remains bullish, with prices staying well above the key 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) is above the midline near 61.00, suggesting potential for further upside.

The confluence of the all-time high and the upper boundary of the trend channel in the $2,530-$2,535 range serves as a critical resistance level for gold. A break above this zone could lead to a rally toward the psychological $2,600 mark.

On the downside, immediate support for XAU/USD is at the $2,500 level. A decisive break below this support could trigger a significant sell-off toward $2,432, the low from August 15. The next major support is at $2,367, the 100-day EMA.