On Friday morning (July 26), spot gold maintained an intraday rebound and is currently trading around $2,371 per ounce. On this trading day, gold traders will focus on US PCE inflation data, which is expected to trigger a big market movement in the gold market.
Spot gold plummeted $32.61 and fell 1.36% to close at $2,364.25 an ounce on Thursday, with the lowest price dropping to $2,353.05 an ounce.
Dhwani Mehta, a senior analyst at FXStreet, wrote on Friday that so far on Friday, the gold price has successfully held near the key support of $2,360 per ounce. Traders are now focusing on the US PCE price index.
At 20:30 on Friday Beijing time, U.S. June personal consumption expenditure (PCE) price data will be released, which may reveal the Fed's interest rate path.
According to authoritative media surveys, the US June PCE price index is expected to rise by 0.1% on a monthly basis, the same as in May. The US June PCE price index is expected to increase by 2.5% annually, compared to 2.6% growth in May. More importantly, on core data, the US June core PCE price index is expected to increase by 0.1% on a monthly basis, the same as in May; the US June core PCE price index is expected to increase by 2.5% annually, compared to a 2.6% increase in May.
Mehta wrote that the US June core PCE price index is expected to grow by 2.5% year-on-year, slightly lower than May's 2.6%. The overall PCE price index for June is also expected to increase by 2.5% year-on-year. US core PCE inflation data that meets or is lower than market expectations may be a lifesaver for gold buyers.
As the most favored inflation indicator of the Fed, the year-on-year change of core PCE price index has a greater impact on policy makers.
"However, it is worth noting that Thursday's data showed that the US second-quarter core PCE price index increased by an annualized rate of 2.9%, higher than the expected 2.7%. This puts June PCE data at risk of being higher than expected. If so, gold may face a new round of selling," Mehta said. "Before the Fed announces its policy and releases non-farm employment data next week, capital flows and position adjustments this weekend may also exacerbate gold price volatility."
"As of Friday morning, the 14-day relative strength index (RSI) remained below 50, approaching 46, which keeps gold sellers in control," Mehta pointed out.
"Mehta added that before gold starts a new downtrend and falls to the 100-day moving average support of $2,324 per ounce, the price needs to close below the 50-day simple moving average (SMA) of $2,360 per ounce. However, buyers may find support again at $2,350 per ounce psychological level before that."
The Latest Technical Analysis of Gold
"On the other hand, the short-term resistance level of gold is found at the 21-day moving average of $2,387 per ounce; if it breaks through this level, the gold price may retest the key level of $2,400 per ounce," Mehta said.
"On the downside, Mehta said that gold prices need to close below the 50-day simple moving average (SMA) of $2,360 per ounce to initiate a new downtrend and fall to the 100-day moving average support of $2,324 per ounce. However, before that, buyers may find support again at $2,350 per ounce psychological level."
(Spot gold daily chart source: FXStreet)
"Mehta added that if gold continues to rebound, the next target for the rebound is the $2,412 per ounce area and the static resistance level of $2,425 per ounce."
"If gold continues to rebound, then the next rebound target will be the $2,412 per ounce area and the static resistance level of $2,425 per ounce."
At 15:30 Beijing time, spot gold was reported at $2,370.88 per ounce.