Investors Drive Gold Above $2,390 Amid Fed Rate Cut Speculation (07.29.2024)

Check our daily analysis for support and resistance levels of the stated trading instruments. Find valuable insights about Gold, EUR/USD, USD/JPY, and GBP/USD. Stay ahead of market trends with our expert commentary and detailed chart analysis. 

Gold surged above $2,390 per ounce on Monday, extending its previous gains as investors anticipated rate cuts from the Federal Reserve. The US June PCE reading, the Fed's preferred inflation measure, matched forecasts, but the core rate rose by 0.2%, slightly exceeding the expected 0.1%. Despite this, market expectations for rate cuts remained strong, with a reduction fully priced for the September meeting and two additional cuts anticipated by year-end. Additionally, heightened geopolitical tensions in the Middle East provided further support for gold as a safe-haven asset. This followed Israel's vow of strong retaliation against Hezbollah after accusing the Iran-backed group of a weekend attack that resulted in 12 deaths. Hezbollah, however, has firmly denied any involvement in the incident.

On Monday, the Japanese yen strengthened to nearly 153 per dollar, building on a 1% gain from the previous week. This rise is largely attributed to increasing speculation that the Bank of Japan will raise interest rates in its upcoming meeting to manage inflation and support the currency. The market anticipates a 10 basis point increase to 0.1% this week, along with the announcement of quantitative tightening measures. The yen's rally began in mid-July, initially spurred by a suspected intervention by Japanese authorities. This momentum was further driven by the unwinding of long-standing carry trades and short positions, as well as safe-haven buying amid a global equity sell-off. Additionally, expectations that the US Federal Reserve might soon begin lowering rates have put pressure on the dollar while boosting other major currencies.

On Monday, the dollar index dipped below 104.3, continuing its sideways trend from the past week as traders awaited the Federal Reserve's latest policy decision. The central bank is widely anticipated to keep interest rates steady this week, shifting market focus to hints about future rate cuts. Data released on Friday showed that the headline PCE price index met expectations, but the core rate was slightly higher than forecasted. Additionally, the US economy grew at a faster-than-expected rate of 2.8% in the second quarter, driven by increased consumer demand. However, it still fell short of the 3.1% average growth seen from 2021 to 2023. The dollar also faced pressure from improved risk sentiment, with global stocks and commodities rebounding from recent lows. Meanwhile, traders kept a close eye on yen movements amid speculation that the Bank of Japan might raise rates this week.

EUR/USD Starts Week Upward, Testing Key Resistance Levels

Before the significant data releases this week in both Europe and the US, the currency pair started the week with an upward movement. The first key resistance level to watch is 1.0870. If this level is surpassed, the next levels to monitor are 1.0900 and 1.0950. On the downside, the initial support level is 1.0810, with subsequent supports at 1.0780 and 1.0710.

USD/JPY Starts Week Lower, Eyes Resistance at 154.70

In the USD/JPY pair, which began the week with downward movement during the Asian session, the initial resistance is at 154.70. Above this level, the subsequent resistances are at 155.50 and 156.00. On the downside, the first support level is at 153.00, with additional support levels at 152.00 and 151.15 below that.

Geopolitical Uncertainty Boosts Gold, Initial Resistance at 2400

With recent geopolitical developments driving the market, gold started the week with an upward movement. The first key resistance level is 2400. If this level is exceeded, the next resistance levels to watch are 2415 and 2430. On the downside, the initial support level is 2380, with subsequent supports at 2365 and 2350 if this level is breached.

GBP/USD Faces Initial Support at 1.2850 Amid Market Volatility

For GBP/USD, the initial support is at 1.2850, followed by 1.2820 and 1.2760, respectively. On the upside, the first resistance is at 1.2890, with subsequent levels at 1.2910 and 1.2950 if the pair breaks above this resistance.