Gold is once again attracting investors’ attention, reaching its highest levels in 10 weeks ahead of today’s key US inflation figures. The price of gold rose by nearly 1% today to $4,407 per ounce.
As the daily chart shows, the price is currently around 4,407.00, having successfully broken above the downtrend line and the moving averages. The metal has climbed to its highest level since 5 June, although it had previously encountered technical resistance at the 100-day and 200-day moving averages around USD 4,387. From a technical indicators perspective, the RSI stands at 67.6, indicating that it is approaching its highest levels since the start of the year, whilst the recent technical breakout has created a positive feedback loop driving further gains and initiating a confirmed uptrend.
The main driver behind this impressive rally is a marked decline in market expectations of further interest rate rises by the US Federal Reserve. Following recent labour market data that was weaker than expected, the probability of a rate rise in September has fallen to 50 per cent from the previous 60 per cent. This represents a favourable macroeconomic environment, as lower interest rates traditionally support gold prices, given that gold is inversely correlated with the US dollar. Investors’ attention is now focused entirely on the US CPI figures due at 14:30, which could ultimately reshape the outlook for the Fed’s monetary policy and thus determine future gold prices.
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