#Gold Technical Analysis# 24K99 News On Tuesday, the spot gold price rebounded strongly, with the price breaking through $2410/ounce at one point and finally closing near this level.
Analysts pointed out that India's move to cut import taxes on gold and silver is expected to boost global gold demand, ending the four-day decline of the spot gold price.
India plans to significantly reduce import tariffs on gold and silver.
The Indian government announced on Tuesday that it plans to reduce import tariffs on gold and silver from 15% to 6%. Industry insiders say that this move may boost retail demand and help curb India's smuggling activities.
Indian Finance Minister Nirmala Sitharaman said in her budget speech on Tuesday: "To increase the domestic value added of gold and precious metal jewelry, I propose to reduce the tariffs on gold and silver to 6%."
She also announced the exemption of import duties on 25 key minerals, including lithium. India has been exploring ways to secure its lithium supply, a key raw material in the production of electric vehicle batteries.
After this news came out, the gold price sharply rose from the Tuesday low of $2388.20/ounce. In the early morning of the New York market, the gold price rose to $2412.06/ounce.
(Spot gold 30-minute chart, source: 24K99)
Increased demand for gold in India may push up global gold prices because India is the second largest gold consumer in the world.
FXStreet analyst Christian Borjon Valencia pointed out that India's significant reduction in import duties on gold and silver boosted the gold price, which may boost retail demand.
The spot gold price closed up $13.01 on Tuesday, up 0.54%, at $2409.16/ounce.
The spot silver price closed up 0.38% on Tuesday, at $29.225/ounce.
In addition to Indian news, the decline in US bond yields is also bullish for gold.
Valencia said that the gold price rebounded on Tuesday thanks to the push of the decline in US bond yields. The yield on the US 10-year Treasury note fell 1.5 basis points to 4.24%, which is beneficial to gold. Traders are waiting for key US economic data including inflation in June and GDP in the second quarter to determine the next move of the Federal Reserve.
Focus on important US data.
Bart Melek, director of commodity strategy at TD Securities, said that the market focus has shifted from US politics to economic data and is "assuming a rate cut in September."
According to the CBOE FedWatch tool, the market expects a 96% chance of a rate cut by the Federal Reserve in September.
As gold does not yield interest, rate cuts can lower the opportunity cost of holding gold and increase its appeal to investors.
The focus of this week will be the release of US second quarter GDP data on Thursday and the latest personal consumption expenditure (PCE) price index to be released on Friday, as this is the preferred inflation indicator of the Federal Reserve.
Melek said that any weaker-than-expected PCE data would have a positive impact, mainly because the market would be more convinced that the Federal Reserve would begin to cut interest rates in September.
Kitco senior market analyst Jim Wyckoff said: "The overall technical outlook for gold is bullish, which continues to attract speculative buyers who operate on the technical side of the market, including buying on dips."
How to trade gold?
According to FXStreet analyst Christian Borjon Valencia, the gold price has ended its continuous decline and formed a "bullish Harami pattern", suggesting that the gold price may continue to rise in the near future. The Relative Strength Index (RSI) is bullish, indicating that buyers are accumulating momentum, which could push up the gold price.
Valencia said that in order to continue the uptrend, gold prices need to break through $2412 per ounce. Once this level is broken, the next resistance level for gold prices will be $2450 per ounce, and then the historical high point of $2483 per ounce.
After this, the target of gold price will aim at the integer mark of $2500 per ounce.
(Spot gold daily chart source: FXStreet)
Valencia added that on the contrary, if the gold price falls below the low point of $2384 per ounce on July 22, there may be a deeper correction. The next support level for gold prices will be the 50-day Simple Moving Average (SMA) of $2359 per ounce.
Once sellers break through the 100-day moving average of $2315 per ounce, it is expected that the gold price will further decline to $2300 per ounce.