Article by: ETO Markets

Gold prices (XAU/USD) rose slightly in early Asian trading on Wednesday on the back of a weaker U.S. dollar. Rising expectations that the Federal Reserve could start cutting interest rates in September continue to support non-interest-yielding gold. In addition, political uncertainty in Europe and globally has increased demand for gold, a traditional safe-haven asset. However, the suspension of gold purchases by the People's Bank of China (PBoC) for the second month in a row could weigh on gold/USD in the short term. As the world's largest consumer of gold, reduced demand from China could limit the upside for gold prices. Investors will be closely watching Fed Chairman Jerome Powell's second congressional testimony on Wednesday, as well as speeches by other Fed officials. In addition, U.S. consumer price index data due on Thursday will also provide more clarity on the Fed's interest rate path.

From a technical point of view, gold prices continued to strengthen on the second day after breaking out of the downtrend channel, staying above the key 100-day exponential moving average (EMA). The 14-day Relative Strength Index (RSI) is also in the bullish zone of 55.0, supporting the upward momentum. The key resistance for gold is at the psychological level of $… above the Bollinger band track, and the next resistance is at $… (April 12 high). If gold can stay above these levels for a sustained period, it could retest the all-time high of $…. Conversely, a break below the 50-day exponential Moving Average (EMA) $… area could attract enough bearish demand to push the price down to $… (July 1 low).