In the early European market on Thursday, spot gold plummeted after soaring earlier, and now the gold price is around $2,442/ounce, down $16 from the day's high. Dhwani Mehta, a senior analyst at FXStreet, published a new article on Thursday, continuing to analyze the technical trend of gold price.
Mehta pointed out that as we enter the August trading period, the gold price is consolidating recent gains. As tensions in the Middle East remain high and the Fed takes a dovish stance, gold can still be traded by 'buying on dips'. From the daily chart of gold, it seems inevitable that the price will test the historical high of $2,484/ounce against the bullish technical background.
Due to the signal of interest rate cuts released by the Federal Reserve and the increasingly tense situation in the Middle East, the spot gold closed at $2446.91 per ounce on Wednesday, up $36.40, or 1.51%; in the early trading in the Asian market on Thursday, the gold price soared to $2458.38 per ounce.
Regarding the Federal Reserve, it kept the benchmark interest rate unchanged on Wednesday. Federal Reserve Chairman Powell said at a news conference that the second-quarter inflation data increased the Fed's confidence and made "further progress" in achieving the 2% inflation target. If the inflation test is met, the Fed may cut interest rates as early as September.
According to the latest report by The New York Times on Wednesday, three Iranian officials said that Iran's Supreme Leader Ayatollah Ali Khamenei had ordered Iran to directly strike Israel in retaliation for the killing of Hamas leader Ismail Haniyeh in Tehran.
Mehta said that ahead of the release of key U.S. non-farm employment data on Friday, traders may take profits. Traders will also be watching the Institute for Supply Management's Manufacturing PMI and weekly initial jobless claims data for new trading incentives for gold prices.
According to the median expectation of economists surveyed by Reuters, the US is expected to add 0.175 million jobs in July.
The latest gold trading analysis
Mehta said that despite the recent rise in gold prices, gold buyers are still seeking a closing price breakthrough of the previous record high of $2,450/ounce. If this happens, the next upward target for gold price will be the high of July 18 at $2,475/ounce and the historical high of $2,484/ounce.
The relative strength index (RSI) on the 14th remained above 50, now approaching 60.50, adding confidence to the bullish potential.
(Spot gold daily chart source: FXStreet)
On the other hand, Mehta added that any correction in the gold price could find initial demand at the previously resistance-turned-support level of $2,425/ounce; if it falls below that level, the gold price could test $2,410/ounce.
The last line of defense for gold buyers is the 21-day simple moving average (SMA) of $2,405/ounce.
At 15:42 Beijing time, spot gold was reported at $2,442.25/ounce.