Jul 04, 2024

Gold has bounced at the previous support of $2,300 and now trades at $2,355 with some resistance ahead of the all-time high.

XAUUSD-–-Daily-Chart XAUUSD – Daily Chart 

Gold prices were boosted on Wednesday after weaker-than-expected economic data from the United States. Investors increased their bets that the Federal Reserve could cut interest rates by September. Comments in the latest FOMC minutes also helped to reinforce that idea. Fed officials said that they still needed more information to decide on rates. 

US business activity in the services sector also contracted after hitting its highest level since August 2023, according to the Institute for Supply Management (ISM). This, combined with weaker job data, led to a rise in the number of Americans filing for unemployment benefits. Private companies were also hiring fewer workers. 

The World Gold Council said the “market could see another leg up.” The international bullion group noted that the market is still not saturated, unlike previous periods when gold broke record highs. The WGC also said that gold may remain range-bound if current market expectations prevail. However, there’s a clear path for gold to outperform, possibly fuelled by Western flows. 

There was still a scenario for a gold pullback in the year’s second half, based on a significant drop in central bank demand and rates remaining high for longer. Asian investors have also been big buyers recently and would need to hold out. The WGC noted that gold rose 12% year-to-date, outpacing most asset classes. 

The $2,300 now must support gold, or it could lead to a further correction. Gains in silver have been more impressive, topping $30 an ounce as the precious metal’s “opportunity cost versus holding cash or bonds pulls back,” Adrian Ash from Bullion Vault said.

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