Gold erases previous gains, falls below $2,400

• Gold touches $2,432, then stabilizes below $2,400 under pressure from US 10-year bond yields at 4.274%
• The FedWatch tool projects a 100% chance of a 25 basis point rate cut in September, which supports gold.
• India cuts import tax on precious metals, stimulating demand; key US GDP and PCE data due on Thursday.

gold price Gold was little changed in late North American trading, set to end the day at familiar levels below $2,400 after hitting a daily high of $2,432. Risk aversion and higher U.S. Treasury yields appeared to have limited the advance in non-yielding metals, which typically fall as investors flock to U.S. Treasuries.

Bullion traders pushed up spot prices as US Treasury yields fell ahead of the US 5-year Treasury auction. The 10-year Treasury coupon then rose two basis points to 4.274%, providing a headwind for the gold metal. Meanwhile, the US dollar remains on the defensive, but losses are being trimmed as measured by US Dollar Index (DXY). The DXY index fell 0.08% to 104.38.

A risk-off mood helped gold buyers lift spot prices to a three-day high as traders fully priced in a 25 basis point interest rate cut by the U.S. central bank. Federal Reserve At the next meeting in September.

The CME FedWatch tool shows a 100% chance of a quarter-point cut, while data from the Chicago Board of Trade (CBOT) shows market participants pricing in 53 basis points of easing in 2024, via the December 2024 federal funds rate futures contract.

On the data side, the US economic calendar revealed that the goods trade balance for July registered a smaller-than-expected deficit. Meanwhile, business activity as measured by the Standard & Poor’s Purchasing Managers’ Index (PMI) report was mixed, with manufacturing contracting for the first time since December 2023.

Precious metals were also supported by India’s decision to cut import taxes from 15% to 6%.

Traders prepare for the first reading of the Gross Domestic Production The US second-quarter 2024 GDP data is due out on Thursday, followed by the release of the personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation, for June.

Daily Market Movers Summary: Gold Price Remains Stuck at $2,400 Level

• S&P Global revealed that the services and composite sector purchasing managers’ indices for July exceeded estimates, reaching 56 and 55, with the former beating expectations at 55.
• The S&P Global Manufacturing PMI fell to 49.5 from 51.6, below the consensus of 51.7.
• The U.S. goods trade balance for June was $96.0 billion, down from $98.0 billion and down from $99.4 billion in May.
• GDP for the second quarter is expected to rise from 1.4% in the first quarter of 2024 to 1.9% on a quarterly basis, indicating that the economy is accelerating as the year progresses.
• The Fed’s preferred inflation gauge, the core personal consumption expenditures index, is expected to decline from 2.6% to 2.5% on an annualized basis.

Technical Analysis: Gold Price Retreats from Tuesday’s High

After forming a bullish harem, gold prices reached a three-day high above $2,430, but retreated below the July 23 high of $2,412, indicating a lack of buyers. A daily close below the latter level could expose XAU/USD to further selling pressure, although US data could drive price action on Thursday and Friday.

The Relative Strength Index (RSI) is bullish, although the slope has flattened, indicating a lack of direction and commitment by buyers and sellers.

The XAU/USD pair needs to clear Wednesday’s high of $2,430 to continue the upside. Once cleared, the next resistance will be at $2,450 before challenging the all-time high of $2,483. After that, the $2,500 level will be the next.

Conversely, if XAU/USD drops below the July 22 low of $2,384, a deeper correction is expected. The next support is at the 50-day SMA at $2,359. Once sellers clear the 100-day SMA at $2,315, further losses are expected before a drop towards $2,300.