Although gold has recently pulled back from its highs, several factors still favor its performance. The increase in political uncertainty in the United States has introduced new variables to the gold market. With the assassination attempt on Trump and President Biden withdrawing from the race, the uncertainty surrounding the election outcome has undoubtedly enhanced gold’s appeal as a safe haven. If Trump seems likely to win the election, it could prompt a reduction in U.S. interest rates, providing strong support for gold prices.

Another key focus is the upcoming U.S. economic data, including the non-farm payroll and inflation reports to be released in early August. These reports will significantly impact whether the Federal Reserve decides to cut interest rates further this year. According to a Reuters survey, most economists believe the Fed will cut rates twice this year. Market expectations for a rate cut in September are above 90%. The only factor that could disrupt gold’s upward trend is rising inflation, which might affect investor expectations for the timing of rate cuts. While this scenario is unlikely, it remains a risk, suggesting short-term volatility for gold. Nonetheless, long-term positive factors remain, making it worth holding and observing.

From a technical perspective, gold continues to oscillate within a large trading range. On the daily chart, prices surged to 2,483 before quickly retreating, indicating possible profit-taking and a false breakout signal. Currently, gold is hovering above the 2,350 support level, suggesting short-term selling pressure above and buying interest below this level. If gold fails to stay above 2,350, it could decline to the bottom of the trading range at 2,300-2,280. Conversely, a quick rebound after a drop below this level would be a good buying opportunity. Overall, as long as the key 2,350 level holds, the market outlook remains strong. Investors should continue to closely monitor U.S. economic data and its impact on gold.

Hugo Leong

Gold Analyst of Hantec Group