The price of gold remains elevated after a recent rally above $2,500.
Gold – Daily Chart
The price of gold has moved to touch the recent breakout trend line and has moved back toward the recent highs around the $2,525 level. The recent support is vital for the path forward.
Gold has been moving higher as the Federal Reserve moves to a dovish tone and signals interest rate cuts ahead. PCE pricing data on Friday from the United States will have a bearing on inflation and gold’s outlook.
Gold had slipped earlier in the week with a stronger US dollar as investors buy the US currency for month-end portfolio rebalancing. US data this week has failed to boost gold with GDP data coming in stronger at 3% versus 2.8% and that was dollar positive.
Traders will now look at the inflation figures on Friday, which may provide further evidence for the Fed Chair Jerome Powell after he said last week the “time has come” to ease borrowing costs.
The latest World Gold Council report said global gold ETFs experienced their strongest month since April 2022, with $3.7bn in July, the third consecutive monthly inflow. Money came in from all regions with Western funds leading the way
Recent inflows and the rise in the price of gold have pushed the total AUM of global gold ETFs to $246bn. Collective holdings rebounded to 3,154t, which is the highest since January
North American funds saw inflows of US$2bn, which reversed minor outflows from May and June. Continued tension between Russia and Ukraine has fuelled the rally in bullion, alongside a failure to secure a ceasefire in the Middle East.
The path ahead in gold will rely on these dynamics with the inflation figures on Friday possibly confirming a rate cut in September. A lower-than-expected inflation number could drive gold further.
