Yesterday, on Thursday, the price of gold gained strong positive momentum and rose to its highest level since May 22, after the latest inflation report in the US increased hopes for a Fed rate cut in September. However, the commodity lacks consistent buying. Simultaneously, the bullish sentiment in the stock markets is causing some selling of the precious metal.
At the moment, the price of gold seems to have paused its three-day winning streak, though any significant corrective decline still appears to be a buying opportunity amidst the upcoming Fed rate cut cycle and geopolitical risks. In addition, political uncertainty in the United States and Europe and concerns about the global economic downturn should serve as a tailwind for the XAU/USD pair, guaranteeing caution to the bears.
Now, in order to get a new impulse in the XAU/USD pair later in the American session, traders should pay attention to the release of data from the PPI - the US producer price index - and consumer sentiment research at the University of Michigan.
From a technical point of view, yesterday's steady breakout of the $2,400 mark was perceived as a new incentive for the bulls. Moreover, the oscillators on the daily chart are gaining positive momentum and are far from the overbought zone. This once again confirms the short-term positive outlook for gold, suggesting that any significant decline can be seen as a buying opportunity and remain limited.
Some subsequent selling below the horizontal level of $2388 may push XAU/USD towards the $2360 area, with some intermediate support near the $2369 area.
On the other hand, the overnight swing high of around $2425 now serves as the immediate barrier, above which gold will once again aim to overcome the historical high of around $2450, reached in May.