Article by: ETO Markets

Gold rose back above $2,500 in Asian trading on Thursday, supported by expectations of a Fed rate cut and geopolitical tensions in the Middle East. The market expects the Federal Reserve to cut interest rates in September, which could boost demand for gold as lower interest rates reduce the opportunity cost of holding non-yielding bullion. In addition, political uncertainty in the United States and global economic concerns have further boosted gold prices. However, the strength of the U.S. dollar may limit the upside of gold prices, as it makes dollar-denominated gold more expensive for most buyers. Investors will be closely watching U.S. second-quarter GDP data on Thursday for more clues on the pace of the Fed's rate cuts, while Friday's PCE price index data will also be in focus.

Gold prices remained positive during the day, although still constrained by a five-month uptrend channel upper boundary and all-time highs. However, the overall trend remains bullish, with prices well above the key 100-day exponential moving average (EMA). The 14-day Relative Strength Index (RSI) is above the midline near 61.00, indicating that upside potential remains. The key resistance to the upside is located in the $…-… area, which is the confluence of all-time highs and the upper boundary of the trend channel. A break above this level could see further gains to the psychological $… level. On the downside, initial support for XAU/USD is at the round $… mark. A break below this level could lead to a significant drop in gold prices to the August 15 low of $…, with further support at $…, the 100-day EMA.