04.07.202411:08 Forex Analysis & Reviews: XAU/USD. Review and analysis

The price of gold continues to hold near a two-week high amid growing expectations for a Fed rate cut in September. However, a strong bullish sentiment in the global stock markets is seen as an obstacle for the precious metal, especially given the low market liquidity due to the US Independence Day holiday. Even so, the retracement in gold prices is tempered by expectations of the Fed beginning a rate-cutting cycle in September. This is corroborated by US macroeconomic data released on Wednesday, indicating signs of labor market weakness and, consequently, an economic slowdown. According to FOMC members, as per the minutes, US economic growth is gradually slowing. These events have led to a sudden drop in US Treasury yields and, naturally, the US dollar falling to a three-week low. All of this continues to support the non-yielding yellow metal.

Traders should also await Friday's NFP release – the monthly US employment data – before preparing for the next phase of directional movement.

From a technical standpoint, yesterday's breakout of the 50-day Simple Moving Average (SMA) and the fact that oscillators on the daily chart have started gaining positive momentum again favor the bulls. Some subsequent buying and a sustained rise beyond the $2369 level will confirm a constructive outlook, setting the stage for reaching the round figure of $2400. From there, the price of the precious metal could continue its path toward the historical high of $2450 reached in May.

On the other hand, any significant pullback attracts new buyers near the breakout of the 50-day SMA, around $2339-2338. The next significant support is tied to the $2325-2315 area, a break of which could make the precious metal's price vulnerable to further decline below the round figure of $2300 and test the $2285 level. A convincing break below the latter will be seen as a new trigger for the bears.