Gold Price Analysis and Chart

• Gold has risen for three straight days
• Solidifying hopes that US rates could fall at least once this year have helped
• Inflation data will of course be key, and are coming up

Gold prices are higher again on Thursday as the market hopes that the United States will see lower interest rates this year keeps demand solid and allows traders to dream again of record highs. Recent US labor market data and commentary from Federal Reserve Chair Jerome Powell have done nothing to alter bets that the longed-for first reduction in borrowing costs will come in September, with the chances of yet another cut by December prices at just under 50%. The prospect that rates could rise seems to have been comprehensively banished absent a huge, unexpected upward turn in the inflation data.

Gold famously yields nothing so tends to do better when rates fall, taking broader paper yields with them. Of course, gold is also held rightly or wrongly as an inflation hedge. But there’s little sign that relaxing global price pressures are undermining its appeal to date.

Sadly, there are also plenty of geopolitical risks that are keeping gold’s haven qualities to the fore, notably of course conflict in Ukraine and Gaza.

The metal hit record highs above $2,400/ounce back in May. The London Bullion Market Association price hit $2,427.30 and hasn’t retreated far since.

The market will now look to official US inflation figures, with consumer prices in the spotlight on Thursday, and producer prices on Friday.

Gold Prices Technical Analysis

Daily Chart Compiled Using TradingView

With prices so elevated you can take your pick of uptrends on the gold charts, with prices a very long way indeed from threatening the longer-term trend lines.

However, the uptrend from mid-March remains in immediate focus. Prices broke below it at the end of June but that didn’t last. They very obviously bounced at retracement support of $2,299.241 and have respected the trendline since. It now offers support well below the market at $2,342. Bulls will now need to regain July 5’s peak of $2,391.78 and durably hold the market there if they’re going to crack psychological resistance at $2,400 and put the record peaks back in view.

Despite a quite solid fundamental and technical backdrop, it’s possible that this market could start to look a little over-extended. Prices are nearly $200/ounce above their 200-day moving average after all, even if the Relative Strength Index doesn’t suggest massive overbuying yet.

This could be an environment in which it’s as well to watch out for reversals, but they’re unlikely to be very serious while that retracement support holds.

--By David Cottle for DailyFX