Article by: ETO Markets

Gold prices (XAU/USD) rose for the second day in a row and renewed their weekly high, driven by risk aversion and expectations of a Federal Reserve rate cut. With equity markets generally weakening and investor demand for safe-haven assets increasing, gold has attracted some buyers. The Federal Reserve is expected to start cutting interest rates in September, further increasing the appeal of non-yielding gold. While higher Treasury yields and the dollar's climb to a near two-week high could limit further gains in gold prices, expectations for the Fed's policy path remain supportive. Traders are focused on the upcoming release of US second-quarter GDP and PCE data, which will give fresh clues to the Fed's interest rate decision, which in turn will influence the direction of the gold market.

From a technical point of view, gold prices rebounded from the $…support level this week, which coincided with the 100-cycle SMA on the 4-hour chart and the 50% retracement of the June-July rally, indicating strong support in this area. If gold breaks below this zone, it could dip further to the 61.8% Fibonacci level of $…-…, and possibly even to the $…-… zone, with an ultimate target of $…. However, gold is trading at the 23.6 Fibonacci level in the $…-… region and further challenging the all-time high of $… hit on July 17. Until then, the $… area may provide some intermediate resistance. Therefore, traders need to pay close attention to the above key technical levels to capture short-term opportunities in the gold market.