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Today, Tuesday, marks the second consecutive day of rising gold prices, as well as the fifth positive movement day out of the last six. However, due to some purchases of the US dollar, the precious metal remains below its historical high. Prevailing risk conditions are limiting the growth potential of safe-haven assets.
Nevertheless, amid expectations that the Federal Reserve will start lowering interest rates in September, the short-term bias is clearly in favor of the bulls. These expectations were confirmed by comments from Fed Chairman Jerome Powell, which are keeping US Treasury yields low and supporting a positive outlook for the non-yielding yellow metal.
Attention now turns to the release of monthly US retail sales data, which could provide new impetus and opportunities for short-term trading.
From a technical perspective, the breakout of the $2388 supply zone that occurred last week and the sustained strength above the $2400 mark favor the bulls. Oscillators on the daily chart are in positive territory and far from overbought zones, suggesting that the path of least resistance for the non-yielding metal is upwards. Consequently, further strengthening towards breaking the historical high reached in May looks quite likely. Purchases beyond the historical high would be seen as a new trigger for the bulls, paving the way for the continuation of the recent uptrend observed over the past three weeks.
On the other hand, a drop below the round level of $2400 can be seen as a buying opportunity. The decline will remain limited near the breakout point of the $2388 supply zone. However, some subsequent selling below this zone could lead the precious metal's price to the $2369-$2360 area. Further decline could expose the support of the 50-day simple moving average (SMA), currently around $2351.
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