On Tuesday (August 27th), spot gold rose 0.3% to $2,524.94 per ounce, just a step away from the record high of $2,531.60 set last week.
According to the data from the United States on Tuesday, after a 0.1% month-on-month decline in house prices in June, the year-on-year increase was 5.1%, the smallest increase since July 2023. After the data was released, the US dollar index fell 0.3% and dropped to the lowest level since July last year at 100.51. The US economic data currently announced, especially those reflecting inflation and employment, can confirm investors' expectations of a rate cut by the Federal Reserve at the September meeting as long as they do not meet expectations. The current focus of debate is the possibility of a 50 basis point cut instead of 25 basis points. According to calculations by the London Stock Exchange Group (LSEG), the probability of the interest rate futures market predicting a 50 basis point cut by the Federal Reserve is 37%, the same as last Friday. Futures traders expect a cumulative 106 basis points rate cut by 2024. Since the Jackson Hole meeting, Federal Reserve Chairman Powell's speech has ultimately been seen as dovish from all angles. Non-dollar wealth storage tools, including gold, have all rebounded. This is seen as a result of the dovish follow-up development after the Jackson Hole meeting on Friday. Next, investors are waiting for the release of data this week including the preliminary GDP for the second quarter, initial jobless claims, and the Personal Consumption Expenditures (PCE) Price Index, which is the Federal Reserve's preferred inflation indicator. If the above data does not show surprising growth, the scenario of a decline in the dollar interest rate will continue to ferment in the forex market, putting pressure on the dollar to continue its downward trend, and it is expected that gold will also gain momentum to continue to reach new historical highs. In addition, the buying pressure for safe-haven gold brought about by the tense geopolitical situation in many regions around the world should not be ignored.
Source: E-huitong
From a technical perspective, on the daily chart, the price of gold continues to remain above the upper channel of the Bollinger Bands, and recent corrections have been shallow and short-lived, indicating the strong bullish strength of gold. If the series of US data mentioned above this week falls short of expectations, gold is likely to seize the opportunity to rally and reach new highs. Currently, the initial support to watch on the downside is around 2480. If it falls below this level, beware of the risk of a downward correction in gold.
Wang Gang, Bank of China Guangdong Branch
For personal views only, not representative of the views of the organization.