The series of economic and inflation data released by the US last night may significantly reduce investors’ concerns about the Federal Reserve’s willingness and need to raise interest rates aggressively. Firstly, the second-quarter GDP was revised downwards, and personal income and spending also fell in June. This should indicate to the market that the outlook for the US economy is not overly optimistic. For the Fed, whether raising interest rates will drag down US economic growth is a crucial consideration.

Furthermore, the decline in the core and overall personal consumption expenditure price indices in June, the lower-than-expected and lower than previous core personal consumption expenditure price index in the second quarter, which are closely watched by the Fed, should have reduced negative sentiment regarding the Fed’s willingness to aggressively raise interest rates to suppress inflation. The outlook for interest rate movements should provide impetus for a rebound in gold prices from their lows. Coupled with investors’ confidence that the conflict between the US and Iran will not escalate rapidly in the short term, interest in buying gold at lower prices will be boosted. Therefore, gold prices should find support around $4,064 in the short term.

A long position can be established around $4,064, with a short-term target of $4,153 for profit-taking and a stop-loss at $4,044.

Gold Price 1-Hour Chart:

Ferris Kwok

Chief Analyst
Success Finance Group

Email: ferris.kwok@successfn.com