After a downward drift on Monday, gold prices moved sharply upward on Tuesday, soaring to around $4,215 per troy ounce. This increase isn’t just an isolated incident, but rather indicative of a larger trend seen in the market. Several bullish signs suggest a robust near-term outlook for the precious metal.
Bullish crossover
The 20-day Simple Moving Average (SMA) has recently crossed above the 100-day and 200-day SMAs. What does this movement mean for gold investors? This movement indicates a very bullish trend.
The accelerating upward path of each of the three SMAs shows that gold prices are still well above these important technical levels today. Even with this upward movement, gold seems stuck in well-known trading ranges seen in the daily chart. Investors are deeply concerned about falling gold prices. In the event of a decline, the ascending 100-day SMA currently at $3,792.65 will be an important support point. An increased retracement might open the way to the 200-day SMA at $3,515.46.
Recent momentum indicators have begun to signal this bullishness in the gold market. The Momentum indicator has recently ticked higher within positive territories, indicating that buying pressure could persist. The Relative Strength Index (RSI) is a cool 60 right now. This indicates that gold is only in a mid-trading range and well short of overbought territory.
The near-term outlook for gold appears optimistic. If they are able to keep up their prices above the 20-day SMA, they will probably head back to the trending higher. That all changed in June, when surprisingly positive employment data from the United States significantly improved the mood. As a result, investor confidence in the gold market has been restored.
The market participants have been glued to their screens excitedly watching the Federal Reserve’s two-day meeting. Most of them predict that the central bank will announce a 25 basis points (bps) cut on its benchmark interest rate this Wednesday. When interest rates are lower, non-yielding assets like gold benefit. This is since they reduce the opportunity cost of holding the metal. So it should be no surprise that President Trump has publicly called on the Federal Reserve to up the ante and speed up rate cuts—publicly!
As the macroeconomic environment presents a whole new set of challenges and opportunities, investors should better understand what’s happening with gold. Jerome Powell’s current term as Federal Reserve Chair expires in May 2026. This new timeline injects new uncertainty as to what the future course of monetary policy will be. Investors are always eager to know how changes in leadership, whether domestic or foreign, will impact interest rates and long-term economic growth.