FX.co ★ XAU/USD: review and analysis

Gold price consolidates strong gains from the previous day. Against the backdrop of rumors about the Federal Reserve lowering interest rates later this year, there is a short-term bias favoring bulls. These expectations were supported by weaker economic data from the US published on Thursday, further reinforcing recent signs of economic slowdown. Concurrently, with a convincing breakthrough of the 50-day simple moving average (SMA), bulls are favored and suggest that the path of least resistance for the yellow metal lies to the upside.

Additionally, yesterday's dovish forecast from the Bank of England increased the likelihood of a rate cut in August. The ECB's decision to start lowering interest rates in June and the second rate cut by the Swiss National Bank (SNB) in 2024, which occurred yesterday, further confirm the short-term positive price forecast for non-yielding gold. However, the rise in US Treasury yields and the overall bullish sentiment in global stock markets have been the main factors hindering the growth of the precious metal. Nevertheless, for the second week in a row, the XAU/USD pair continues to show growth.

From a technical standpoint, the stable overnight close above the 50-day SMA can be seen as a new stimulus for the bulls. In addition, the renewed positive momentum in the Relative Strength Index (RSI) on the daily chart reinforces the potential for further growth. Therefore, the next step towards testing the resistance around $2388 is possible. Ultimately, the price of gold may attempt to reclaim the $2400 level.

On the other hand, the 50-day SMA, currently around the $2345 area, prevents an immediate decline towards the $2336 area. A convincing breakthrough below the latter and $2325 could expose the round level of $2300, followed by horizontal support at $2285. Some subsequent selling would create a foundation for resuming the recent pullback from the historical peak reached in May, pulling gold further towards the $2250 zone.