Article by: ETO Markets
As Joe Biden exits the 2024 presidential race, endorsing Vice President Kamala Harris, the uncertainty surrounding the U.S. election increases the allure of gold, especially against the backdrop of the market's anticipation that Donald Trump might be re-elected. Trump’s policy inclination towards tax cuts and regulatory relaxation could lead to an expanded fiscal deficit and rising inflation, thereby supporting gold prices. Simultaneously, the rise in U.S. Treasury yields exerts pressure on gold, as it increases the opportunity cost of holding non-yielding assets.
Moreover, market participants are closely monitoring the upcoming preliminary U.S. GDP figures for the second quarter and the Core Personal Consumption Expenditure (PCE) Price Index. These key economic indicators will significantly influence the Federal Reserve's interest rate decisions, thus impacting gold trading strategies. Investors may wait for the release of these data before formulating buy or sell strategies, to assess changes in economic conditions and policy outlook.
From a technical perspective, As of Tuesday's Asian trading session, XAU/USD has fallen for five consecutive days, nearly breaking the upward trend line established over the previous two weeks. Monday's rebound halted abruptly upon reaching the Fibonacci 32.8% resistance level at $…, with prices dropping to a low near $…. The Relative Strength Index (RSI) still maintains above 50, indicating that the downward trend has not fully initiated, allowing gold bulls to keep the price around the $… mark, ready to counterattack at any moment. The 20-day Simple Moving Average (SMA) at $… will provide the first level of support, followed by the Fibonacci 61.8% level at $…. If gold bulls wish to gain the upper hand, they will need to push the price above $….
