Article by: ETO Markets

The gold market is affected by multiple factors, and the trend of gold price shows certain fluctuations. First, the positive tone in global equity markets dented risk aversion, causing gold prices to fall slightly for the second day in a row. However, concerns about the heightened situation in the Middle East and expectations that the Federal Reserve may cut interest rates further in September provided support for gold prices. Weaker-than-expected US producer price data reinforced expectations of an imminent easing cycle by the Federal Reserve, weighing on the dollar and helping to limit the extent of the fall in gold prices. In addition, the dollar has shown weakness recently, hovering near its lowest level in more than a week. As the market focus shifts to the upcoming release of the US Consumer Price Index (CPI), it is expected that a further decline in the inflation data will strengthen the expectation of a rate cut by the Federal Reserve, thus further supporting gold prices. Traders took a cautious approach ahead of the CPI release, leading to an increased wait-and-see mood.

From a technical point of view, gold prices have recently gained support from the 50-day simple Moving average (SMA), and oscillators on the daily chart also indicate that bullish momentum remains. Gold near the $…- $… resistance level has the potential to attract bargain hunters, and there is the potential to retest the all-time high of $…-… set in July. A break above that level could further challenge the psychological $… barrier and set the stage for a new rally. However, if gold fails to hold above the current support levels, especially the 50-day SMA support in the $…-… area, it could face more downward pressure in the near term. The next important support area is located near the 100-day SMA support at $…-…, and a break below this level could see gold continue to retreat to the $…-… area and open room for further declines.