Gold Gains on Softening US Economy

Gold eased to around $2,510 per ounce on Friday but remains on track for its second consecutive monthly gain. This is due in part to anticipated rate cuts by major central banks, which have reduced the opportunity cost of holding non-yielding gold. Recent US data showed that the Federal Reserve’s preferred inflation measures, the headline and core PCE price indices, were revised downward, highlighting a more significant slowdown in the second quarter. Additionally, initial jobless claims fell below expectations, underscoring a softening labor market. US GDP growth for the second quarter was revised upward, yet markets still expect 100 basis points of rate cuts over the Fed’s remaining three meetings this year. The ECB is also expected to implement rate cuts, given the rapid deceleration in price pressures. Furthermore, gold’s safe-haven appeal has been strengthened by escalating conflict in the Middle East.

Technically the first support level is at 2,510. If this level is breached, the next supports to watch will be 2,495 and 2,470. On the upside, the initial resistance is at 2,528; if this level is surpassed, the next targets will be 2,550 and 2,585.