Spot gold holds modest gains above $2,450 after U.S. data relieves recession fears – FXStreet’s Bednarik

Thursday morning’s raft of largely positive U.S. data has helped to ease recession worries and boosted stock markets near fresh weekly highs, with gold holding steady in its recent channel and providing buy opportunities on the dips, according to Valeria Bednarik, chief analyst at FXStreet.

Bednarik noted that spot gold was holding modest gains in afternoon trading following the morning’s volatility.

“XAU/USD fell to $2,432.04 ahead of Wall Street’s opening as a batch of United States (US) data pushed speculative interest away from the safe-haven metal,” she said. “Financial markets welcomed news that US Retail Sales rose by 1% in July, far better than the 0.3% advance anticipated. Furthermore, Initial Jobless Claims rose by less than anticipated in the week ending August 9, up 227K vs the 235K forecast.”

The news drove the U.S. dollar higher against all major currencies, Bednarik noted. “US indexes also advanced, as the numbers spooked fears of a recession while maintaining unchanged the odds for an upcoming Federal Reserve (Fed) interest rate cut,” she said. “Stock markets remained optimistic after the opening, extending gains to fresh weekly highs, but the USD retreated. The second batch of US data was less encouraging, as Capacity Utilization hit 77.8% in July while Industrial Production in the same month was down 0.6%, both worse than expected and below June figures.”

Turning to the short-term technical outlook for the yellow metal, Bednarik pointed out that the daily chart for spot gold is trading comfortably within its recent range, but even though it remains in the green, “it has posted a lower high and a lower low, usually seen as a bearish sign.”

“Technical indicators have turned marginally lower but remain within positive levels, limiting the odds of a steeper decline,” she said. “Finally, the pair keeps developing above all its moving averages, with the 20 Simple Moving Average (SMA) flat above bullish 100 and 200 SMAs. Overall, the case of a steeper leg lower seems unlikely.”

According to the 4-hour chart, Bednarik said the near-term outlook for XAU/USD is neutral to bullish.

“Technical indicators turned higher, but remain at around their midlines,” she said. “Meanwhile, a mildly bullish 20 SMA provides dynamic resistance a few $ above the current level, while the longer moving averages extended their modest upward slopes below the current level. More relevantly, buyers defend the downside at around the 23.6% Fibonacci retracement of the June/July rally at $2,438.80.”

She added that support levels for spot gold are found at $2,438.80, $2,4260.90, and $2,438.80, while near-term resistance is pegged at $2,471.10, $2,483.70, and $2,495.00.

At the time of writing, spot gold last traded at $2,460.70 per ounce for a gain of 0.52% on the session.

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Ernest Hoffman

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