The daily chart shows a more granular view of recent price action after yesterday’s sizeable drop appears to have found support at the 50-day simple moving average (SMA) before seeing a slight lift in early trading.
The MACD indicator hints at an imminent bearish crossover which would excite dollar bears in the event 1960 proves too much of a challenge. The outlook for gold however, continues to rely on the outlook for future Fed hikes and the overall stability of the US economy. If inflation continues to cool on all fronts, markets may revise the probability of the remaining 25 bps hike lower – which can be supportive for gold. Furthermore, any dislocations in the economy as a result of restrictive financial conditions, or another flare up in the banking sector, is likely to add to gold’s appeal as a safe haven asset.
However, the pace at which the US economy is advancing may cause some concern within the Fed after Q2 GDP beat estimates yesterday by a sizeable margin (actual 2.4% vs 1.8% expected). Historically low unemployment, combined with a strengthening economy, poses a potential threat to higher inflation which may be sufficient to warrant further hikes, lead to a firming of the dollar and perhaps see some weakness in gold.
The MACD indicator hints at an imminent bearish crossover which would excite dollar bears in the event 1960 proves too much of a challenge. The outlook for gold however, continues to rely on the outlook for future Fed hikes and the overall stability of the US economy. If inflation continues to cool on all fronts, markets may revise the probability of the remaining 25 bps hike lower – which can be supportive for gold. Furthermore, any dislocations in the economy as a result of restrictive financial conditions, or another flare up in the banking sector, is likely to add to gold’s appeal as a safe haven asset.
However, the pace at which the US economy is advancing may cause some concern within the Fed after Q2 GDP beat estimates yesterday by a sizeable margin (actual 2.4% vs 1.8% expected). Historically low unemployment, combined with a strengthening economy, poses a potential threat to higher inflation which may be sufficient to warrant further hikes, lead to a firming of the dollar and perhaps see some weakness in gold.