Gold has thus far dominated the entire financial story today. Recent economic data point toward a change in direction, further fanning this speculation. The most recent Consumer Price Index (CPI) numbers indicate a much less inflationary environment. This has fueled fevered chatter over a possible interest rate cut from the Federal Reserve in September.
The most recent CPI data came in hot at 0.2% month-over-month. This figure meets expectations but is below last month’s 0.3% increase. Year-over-year the CPI was unchanged at 2.7%, a hair under the 2.8% expectation. Core CPI rose by 0.3%, in line with estimates. This increase is significant, building off an increase of 0.2% in the month prior and removing the impact of volatile food and energy prices. That combination of figures adds to the case for a rate reduction. Market participants are accordingly pricing in a greater than 94% likelihood of a cut at the next Federal Open Market Committee meeting.
Given this economic backdrop, gold’s price has been surprisingly resilient, staying strong above critical floors of support. It remains well above the FVG and POC support at $3,331. This development screams bullish momentum. Analysts expect sustained demand for gold at a macro level. Such a move would result in an eventual bid to retest the key resistance area between $3,430 and $3,500. This zone is very important to watch for anyone following gold’s performance over the short term.
Positive, supportive economic data has given rise to this positive momentum in the market. At the same time, solidly established anchored VWAPs are further supporting gold’s bullish structure. These bullish indicators point to bullish trader sentiment regarding gold’s long-term trajectory, possibly foreshadowing more gains in the months to come.
With no clear bullish trend or breakout in place, market watchers are keeping a very close eye on the $3,430–$3,500 resistance zone. This region would be critical to determine gold’s future moves. If gold can break above this level with powerful buying momentum, it will lure in many more investors. If so, it stands to build even more of gold’s safe-haven credentials in times of economic turmoil.