In the early days of the week, gold prices have continued to rise, marking a third consecutive day of recovery. This comes after a significant drop last week, with the precious metal benefiting from indications that the Federal Reserve might implement a 50 basis point rate hike in September. The uncertainty surrounding the US economy, coupled with weak economic data, has also contributed to the positive momentum in gold prices.
Following talks of a possible recession in the US economy, investors have been on edge, despite the relative calm that has ensued in recent days. The upcoming release of the US inflation report for July is eagerly anticipated, as it is expected to provide more clarity on the Federal Reserve’s future monetary policy decisions. Geopolitical tensions further support the positive outlook for gold prices, adding to the overall bullish sentiment in the market.
Technical Analysis and Price Levels
On a technical level, the daily chart for gold shows a strong bullish setup, with Monday’s price action breaking above the 61.8% Fibonacci retracement level of the recent $2483 to $2353 move. A close above this level would confirm the bullish signals, with further upside targets at $2452 (76.4% Fibonacci level), $2477 (previous spike high), and ultimately a new all-time high at $2483. The 10-day moving average at $2422 and the 50% Fibonacci retracement level act as solid support levels, maintaining the overall bullish structure of the market.
As the market awaits the release of US CPI data, traders are likely to tread cautiously, with potential price movements expected to be slower. Resistance levels to watch include $2452, $2462, $2477, and $2483, while support levels can be found at $2433, $2422, $2418, and $2403. The combination of fundamental factors, technical analysis, and market sentiment all point towards a positive outlook for gold prices in the coming days, with the potential for further upside momentum.