Is Gold’s Glitter Fading? Why $3,300 Might Just Be the Starting Line for a Surprising Market Twist
Market movers: Eyes on Fed, GDP, and jobs data
- The yield on the 10-year US Treasury note is holding near 4.33% on Wednesday, stabilizing after a sharp decline in the previous session. Meanwhile, the 30-year yield (US30Y) is trading around 4.86% as investors adopted a cautious stance ahead of the Federal Reserve’s policy announcement.
- The ADP Employment Change report for July, released at 12:15 GMT, showed the U.S. private sector added 104,000 jobs, surpassing expectations of a 78,000 increase and rebounding sharply from June’s revised 33,000 decline.
- The advance reading of Q2 GDP is due at 12:30 GMT, with expectations pointing to a 2.4% annualized expansion, a notable rebound from the -0.5% contraction seen in the previous quarter.
- The core PCE Price Index, the Fed’s preferred inflation metric, is projected to slow to 2.4% QoQ in Q2, down from 3.5% previously.
- The Fed is expected to keep interest rates unchanged at 4.25%-4.50%. However, the real focus will be on the forward guidance as markets are increasingly pricing in a rate cut by September, with odds rising to around 65%, according to CME FedWatch. A dovish Fed tone could weigh on the US Dollar and real yields, offering a fresh upside push to XAU/USD. Conversely, if the Fed pushes back against market pricing or signals that rate cuts aren’t imminent, Gold could struggle to break above its recent range and may dip lower.
- Tuesday’s data offered mixed signals on the US economy. The JOLTS Job Openings report showed vacancies declined by 275,000 to 7.437 million in June, signaling a gradual cooling in labor demand. However, the Conference Board’s Consumer Confidence Index rose to 97.2 in July, up from 95.2 in June and well above expectations of 95.4.
Technical analysis: XAU/USD tests key support near 50-day EMA ahead of Fed
From a technical perspective, XAU/USD is testing a key confluence zone on the daily chart, where the 50-day Exponential Moving Average (EMA) at $3,323.22 overlaps with a rising trendline support drawn from March lows. While the price is currently trading marginally below the ascending trendline, the breach lacks strong momentum, suggesting it may be a false breakout.
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