Article by: ETO Markets

Gold prices (XAU/USD)  were pressured by rising risk appetite, although geopolitical risks and expectations of a Fed rate cut provided some support. As fears of a recession in the United States eased and sentiment turned positive, global stock markets rose broadly and demand for safe-haven assets such as gold fell. However, the ongoing conflict in the Middle East and expectations that the Federal Reserve could start cutting interest rates in September have helped limit further declines in gold prices. The latest US economic data showed retail sales rose more than expected in July and the Labour market held up, further easing fears of a sharp economic slowdown. The series of data has led to a reduction in bets on a big Fed rate cut, with expectations leaning more towards a quarter-point cut at the September meeting. In addition, a recovery in US Treasury yields and a stronger dollar have weighed on gold prices. However, as geopolitical risks have not been completely eliminated, gold can still maintain its safe-haven demand to some extent.

From a technical point of view, the gold price trend is still in favor of the bulls. While gold has not been able to effectively break through the $… resistance level, technical indicators show that it remains in positive territory, indicating that the market still has upside potential. If follow-on buying is strong, gold could retest and break out of July's all-time high of $…-… and further break through the psychological $… level, confirming a month-long break from the wider trading range and setting the stage for further gains. On the other hand, if gold continues to retreat, the lower support is in the $…-… area, with further support around $… and the weekly low of $…. A break below the $… mark could further test the 50-day SMA support (around $…). If this support level is broken, gold could continue to retreat to the 100-day SMA (around $…) and late July lows (around $…).