• Tuesday’s gold price declined in tandem with the USD’s rise.
• Rising global threats, the expectation of Fed rate reduction, and robust demand for gold could limit the yellow metal’s decline.
• Later on Tuesday, investors will be watching for the Fed’s comments by Waller, Williams, Barr, Bostic, Collins, and Mester.

Tuesday saw a decline in the price of gold (XAU/USD) following its record high earlier in the day. The rising potential of precious metals may be constrained in a quiet session by the absence of new catalysts in the form of superior economic data. However, sustained geopolitical concerns, strong demand from central banks and Asian purchasers, and increased wagers on interest rate cuts from the US Federal Reserve (Fed) could all help to strengthen the yellow metal.

Given that the Fed’s Waller, Williams, Barr, Bostic, Collins, and Mester are expected to speak later on Tuesday, gold dealers will be paying closer attention to what they say. The main event on Wednesday will be the FOMC Minutes. Moreover, the aggressive approach taken by Fed officials is probably going to strengthen the US dollar and weaken the value of gold denominated in USD.

Daily Digest Market Movers: Despite the USD’s recovery, the price of gold is struggling to rise

• On Monday, gold hit a record high of $2,450, while silver prices approached 12-year highs. This year, gold has increased by 18% and silver by 35%.

• The Federal Reserve “will need to allow our restrictive policy some further time to continue doing its work,” according to Fed Vice Chair Michael Barr.

• Another permanent voting member of the Fed’s rate-setting committee and Fed policymaker Philip Jefferson stated that while inflation was still declining, it was not doing so quite as swiftly as he had anticipated.

• According to Atlanta Fed President Raphael Bostic, the policy is tight, and it will take some time before the central bank is confident that inflation will reach 2%.

• Based on the CME FedWatch Tool, investors anticipate two rate reductions by the end of the year and a 76% likely cut by the Fed by 25 basis points (bps) in September. 

Technical Analysis: The gold price continues to have a positive outlook

The price of gold is slightly down for the day. Based on the four-hour timeframe, the yellow metal maintains its bullish position by staying above the important upward-sloping 100-period Exponential Moving Average (EMA). The Relative Strength Index (RSI) is currently at 69.00, in the positive zone, indicating that it is more likely that the support level will hold than break.

Any additional purchases could aim to break above the $2,450 all-time high. The next obstacle is located at the psychological mark of $2,500 further north.

Conversely, the $2,420 resistance level that has now transformed into a support level serves as the first level of support for XAU/USD. The $2,400 round figure is the additional downside filter to keep an eye on. The 100-period EMA, or $2,355, will be the critical level of conflict. 

US dollar exchange rate for this week