Article by: ETO Markets

Gold prices (XAU/USD) continued to rise this week, largely driven by a weaker dollar and risk aversion in the market. Investors are awaiting the release of U.S. consumer price index data, which is expected to be a key influencer at the Federal Reserve's September policy meeting. If the data shows inflation cooling further, the market could increase bets on faster policy easing by the Fed, boosting gold prices. CPI is expected to come in at 0.2% m/m in August, with the annual rate falling from 2.9% to 2.6%, while core CPI is expected to remain at 3.2% y/y. The data could strengthen the case for an interest rate cut at the Federal Reserve's September meeting. At the same time, weakness in the stock market has also encouraged some inflows into safe-haven assets such as gold. In addition, although the first debate between Vice President Kamala Harris and Donald Trump did not have a noticeable impact on the market, the prospect of the Fed's easing policy still attracted investors. According to CME's Fed Watch tool, the market is currently pricing in a 67 percent chance that the Fed will cut rates by 25 basis points at its September meeting.

From a technical point of view, gold is currently trading above $…, but still faces resistance in the $…-… supply area. This area is the top of the trading range of the past few weeks and serves as a key barrier to further gains. If gold can break out of that range and break through the all-time high of $…, it could attract more buying and push gold higher, with a possible target of $… or higher. However, if gold fails to break above $… and pulls back, initial support will be at $…, with further support between $… and $…. These levels form a key support to the downside, and a loss of ground could trigger further selling that could take gold to the 50-day Simple Moving average (SMA) level of $… or even lower to $….