Gold Remains an Ideal Long as Critical Support Holds - Eyes on $2,450 Breakout
NEW YORK (July 29) This week is pivotal for gold, indexes, and FX, with market-moving data releases, central bank meetings, and major company earnings reports to come.
For gold, the focus will be on the FOMC rate announcement on Wednesday and the July jobs report on Friday. Anticipated downside risks for the US dollar index could benefit gold prices.
Meanwhile, the technical path of least resistance remains to the upside for the precious metal, making it an ideal long candidate from a trading point of view.
FOMC Meeting: Preparing for a September Rate Cut
The Fed may take a more dovish stance at this week’s meeting, reflecting recent comments by FOMC officials and weak US economic data. The slow disinflation process and rising unemployment rate, now at 4.1%, suggest that the current policy might be excessively restrictive.
With the global trend towards policy loosening, the Fed could seek to avoid unnecessary economic strain, especially given its previous mismanagement of inflation and interest rates.
Market expectations already indicate a September rate cut, with around 68 basis points worth of cuts priced in by year-end. If the Fed adopts a dovish tone, predictions could increase to potentially three cuts before the year ends.
Additional Risk Factors: BOJ and US Jobs Report
The upcoming US jobs report and a potential surprise rate hike by the Bank of Japan could further pressure the dollar. The yen has strengthened recently due to the narrowing yield spreads between Japanese bonds and those of other countries.
As the Fed considers rate cuts, the Bank of Japan has only begun tightening its monetary policy, with speculation of a possible rate increase in the upcoming BOJ meeting.
Meanwhile, economists expect around 177,000 net US non-farm job gains for July. The unemployment rate has been rising, and the pace of job gains has slowed, reinforcing expectations of a September rate cut, which could weaken the dollar and support gold prices.
Investing.com
