Gold prices remain under pressure, trading just below the $2,400 mark in Tuesday’s European session. This weakness is primarily attributed to speculation about a potential Donald Trump victory in the upcoming US presidential elections and the resulting impact on inflation expectations.
Market sentiment has been further influenced by President Joe Biden’s withdrawal from the race and the nomination of Kamala Harris as the Democratic candidate. This political uncertainty has led to a stronger US Dollar, making gold more expensive for investors.
However, the gold market’s near-term outlook remains uncertain as investors await key US economic data releases this week. These include the preliminary S&P Global PMI for July, Q2 GDP figures, June Durable Goods Orders, and the crucial Personal Consumption Expenditures (PCE) Price Index, which serves as the Fed’s preferred inflation gauge.
These data releases will offer insights into the Federal Reserve’s potential timeline for reducing interest rates. While the Fed is widely expected to start cutting rates in September, the specific timing and magnitude of these cuts remain unclear.
In India, the MCX Gold price has fallen below Rs. 69,000 due to the government’s decision to reduce basic custom duty on precious metals. This move is expected to stimulate demand for physical gold in the country.
From a technical perspective, gold prices appear vulnerable near the $2,400 level, hovering close to the 20-day Exponential Moving Average (EMA). However, the upward-sloping trendline from February 14 remains a significant support level for gold bulls. The 14-day Relative Strength Index (RSI) suggests a sideways trend, but the upside bias remains intact.
A break above the all-time high of $2,480 would signal renewed bullish momentum for gold.