Article by: ETO Markets

Gold prices (XAU/USD) rebounded to the $2,424-2,425 region following the release of the U.S. Consumer Price Index (CPI) data, the highest level since May 22. U.S. CPI data showed slowing inflation, further supporting market expectations for a Federal Reserve rate cut in September. However, a modest rebound in US Treasury yields revived demand for the US dollar, leading to some pullback in gold prices during Asian hours on Friday. In addition, the underlying bullish sentiment in equity markets has also led to safe haven flows out of gold. Still, the downside for gold prices appears limited as the market comes to terms with the possibility of the Fed starting a rate cut cycle sooner rather than later. Geopolitical risks, political uncertainty in the US and Europe, and concerns about a global economic slowdown are expected to continue to provide support for gold prices. Traders will be closely watching the upcoming release of the US Producer Price Index (PPI) and the University of Michigan consumer sentiment survey for further market movements.

From a technical point of view, the continued rally in gold prices broke through the $… mark, which is seen as a new trigger for bullish traders. The oscillators on the daily chart show positive traction but are still not in overbought territory, indicating a positive near-term outlook for gold prices. Any meaningful pullback could be seen as a buying opportunity, with declines expected to be limited. The key support is in the $…-…area, which is the June 8 and July 8 highs and the 61.8% Fibonacci retracement level. Further support is in the 50% Fibonacci retracement at $…- $…area. On the bank side, the overnight high of $… is an immediate resistance level, a break above which could see gold re-challenge the all-time high of $… hit in May.