Gold rises as US CPI inflation shows moderation

• While gold rose, US consumer price index data for June came in lower than expected.
• Information indicates that there is a strong possibility of a price correction in September – which is good for gold.
• Gold makes additional gains as Powell carefully sets positive pitch in testimony to lawmakers in Washington.

Gold (XAU/USD) traded above $2,400 on Thursday, after declining US Consumer Value Index (CPI) data for June suggested easing pressure on prices. Lower than expected CPI data makes it more likely that the Federal Reserve (Fed) will be accommodative to lowering interest rates within the same period, which is certain for gold as it reduces the risk rate of maintaining outrageous interest rates. Gives. Non-interest bearing assets.

Gold is taking advantage of additional rising data which shows that central banks are continuing to hoard across the region. This comes despite Sunday’s news that gold’s biggest customer, the People’s Cabinet of China (PBOC), abstained from buying the precious metal for its second event in June after 18 months of purchases.

Gold rises after US CPI decline

Gold rose on Thursday after a drop in US CPI data painted a picture of a cooling economy, suggesting interest rates in the United States will fall, making gold a more attractive investment in the process.

US CPI rose 3.0% year-on-year in June, below estimates of 3.1% and the previous occasion’s estimate of 3.3%. According to data from the United States Bureau of Excerpt Statistics, the CPI declined 0.1% on a month-on-month basis in June, when economists had expected a decline of 0.0% to minus.1% in May.

The core CPI, which excludes risky food and effort components, meanwhile cooled to 3.3%, below expectations of 3.4% from 3.4% earlier. On a per 30-day basis, core CPI rose 0.1%, below the May forecast of 0.2% and 0.2%.

This information is additional evidence that inflation is falling towards the Fed’s 2.0% target and it is more likely that the central financial institution will start cutting interest rates – which is a good building block for gold.

Gold rose due to Powell being centrist, market saw cuts

Gold rose on Wednesday as the market took a cautiously positive view of Fed Chairman Jerome Powell in his second testimony before US lawmakers in Washington.

In response to the Space Monetary Products and Services Committee, Powell noted that “we view the tide Fed coverage as restrictive,” indicating that at their tide level, interest rates would be less than enough to bring inflation back to the Fed’s 2.0% target. Was doing the process effectively.

He was asked about the timing of a Fed interest rate cut later in the month and whether he would expect the Fed’s favorite gauge of inflation, the personal consumption expenditure (PCE) price index, to fall below the Fed’s earlier target. Rather than dragging out the cause, Powell noted that he would not do so anymore, as a result, “there is a certain pace of inflation,” and “you don’t want to wait until inflation gets down to 2.0%.” In its concluding study, each headline and core PCE fell by 2.6%, suggesting the Fed is nowhere near cutting prices.

This strengthened the market-based barometer of when the Fed would cut interest rates. CME FedWatch software continues to project a top 70% probability of a reduction in the Fed budget rate – the Fed’s number one coverage interest rate – to zero.25% in September. One of these reductions would reduce the coverage rate to a higher level of 5.25%. CME FedWatch software bases its outlook on the cost of 30-day Fed budget futures.

While investors are hoping for more concrete details on when the Fed will cut interest rates, Powell remains optimistic about reaching a “soft-landing” for the economy – when inflation will come into focus again without unemployment surging. Very enthusiastic feeling falls for. As mentioned, Friday’s legal employment document, Nonfarm Payrolls drop, showed that the United States unemployment rate increased from 4.0% to 4.1%, while the negative trend was expected. This was a chance to take the lead for the third time in a row.

Gold rises due to purchases by central financial institutions

Gold posted additional gains on Thursday as central banks around the world are still hoarding gold despite the knowledge that the biggest consumer, the People’s Cabinet of China (PBOC) has stopped buying gold for two months . In June.

Despite the absence of the PBOC from the market, which accounts for more than a quarter of the purchases, the Republic of India Cabinet (BoI) bought 9 lots of gold in June, the National Cabinet of Poland bought 4 lots and the Czech National Cabinet bought 4 lots of gold. Two lots, according to TD Securities.

Citibank analysts are confident of central bank demand, which they see emerging in the second half of the year, reaching about 1,100 lots in 2024, an increase of 5.8% from last year. He completely downplayed the beneficial properties for the growing possibility of trade wars and issues with US fiscal insurance policies.

To that end, Citibank has a legitimate forecast that gold will reach $2,600 by the end of 2024.

Meanwhile, Bert Melek, head of commodity technology at TD Securities, estimates that gold will reach $2,475 in the first quarter of 2025.

Technical Research: Gold is rising for the third consecutive time

Gold posts its third consecutive gain after forming a bearish two-bar reversal trend (green-shaded rectangle in the chart below) that took control of gains in early July. These growth patterns are then followed by a long green-up event followed by a long red-down event of a homogeneous limit and measurement. This could be a sign of a momentary reversal. Now its performance is not good in terms of gold.

XAU/USD daily chart

The approach is non-transparent. Still, there is a possibility that gold may satisfy the negative effects of the two-bar development and return to the 50-day Easy Moving Regional (SMA) at $2,344. In the same year, its formulation after the treatment partially invalidated it and suggested that the associated charges could be higher.

A break above the development’s top level and Friday’s high at $2,393 would provide strong bullish confirmation of continuation higher. This could also potentially weigh on the next target at the all-time top of $2,451.

The bearish Head & Shoulders (H&S) top development that took shape from April to June has been invalidated via a hot cure. On the other hand, there is still an expectation – albeit much diminished – that a more advanced topping development might have formed in its place.

If there is a fancy development in the park of H&S, and the related fee breaks below the neckline of the development at $2,279, an upside loss may still be possible with a conservative target of $2,171, 0.618 of the peak of the development. The ratio is additional embarrassment.

The trend is now sideways in both short and medium time frames. Gold remains in a bullish trend in the long term.