Gold Eyes Support at 2368
In gold the first support is at 2368, with subsequent levels at 2345 and 2320 below that. Above, the initial resistance is at 2395, followed by 2405 and 2430 if this level is surpassed.
US Inflation Data Boosts Gold Prices, Traders Eye Fed Rate Cut
On Friday, gold dipped below $2,410 per ounce after a nearly 2% increase in the previous session but remains poised for its third consecutive weekly gain. Softer-than-expected US inflation figures, with headline inflation easing to a one-year low of 3% in June and annual core inflation dropping to a three-year low of 3.3%, boosted expectations for a Federal Reserve interest rate cut. Traders now see a 93% probability of a September rate cut, up from 73% earlier in the week. San Francisco Fed President Mary Daly supports rate cuts, while Chicago Fed President Austan Goolsbee remains optimistic about achieving 2% inflation.
The dollar index hovered around 104.5 on Friday, poised for a second weekly decline, as subdued US inflation and recent Fed statements solidified expectations of a September rate cut. The index dropped sharply to 104.08 on Thursday after reports showed US annual inflation fell to 3% in June, a one-year low, missing expectations of 3.1%. Market sentiment now reflects over a 90% probability of a September rate cut, up from around 70% earlier in the week. Investors await US producer inflation data for further insights. The dollar faced pressure from a strengthening yen amidst suspected Japanese intervention.
The Japanese yen hovered around 159 per dollar on Friday, showing volatility after a significant rebound in the previous session due to suspected intervention amidst cooler-than-expected US inflation data. The yen surged by 2.6% to 157.42 per dollar on Thursday, reportedly spurred by official purchases to support the currency after it fell to 38-year lows. Reports indicated that the Bank of Japan (BOJ) conducted rate checks with banks on the euro-yen cross, raising concerns of additional intervention. Senior currency diplomat Masato Kanda declined to confirm government involvement in the yen’s rally. Investors focus on the BOJ’s late July policy meeting, expecting plans for tapering bond purchases and potentially raising interest rates.
