Bednarik noted that gold prices regained strength after successfully reclaiming $2400 per ounce. As gold prices surpassed the first resistance level at $2424 per ounce, it is likely to rise further, with the next target being to challenge the resistance level at $2438.80 per ounce.
On Thursday, gold surged significantly due to strong safe-haven demand and rising expectations that the Federal Reserve will cut interest rates sharply in September.
Spot gold closed sharply higher on Thursday, rising by $44.51 or 1.87%, to $2427.11 per ounce, ending a previous five-day losing streak.
In his analysis, Bednarik mentioned that speculation about the Federal Reserve making more significant rate cuts than previously expected has supported gold. A few months ago, market speculators anticipated the Federal Reserve might only cut rates once before the year-end, with low expectations for a second cut. However, recent macroeconomic data suggest the economy might face a recession, sparking speculation of three rate cuts by year-end. Additionally, market participants are beginning to believe that the Federal Reserve might cut rates ahead of its upcoming September meeting.
According to CME's "FedWatch" tool, the market sees a 72% chance of a 50 basis point rate cut in September, up from 70% on Monday, and further rate cuts are expected by December.
Allegiance Gold Chief Operating Officer Alex Ebkarian said: "The outlook for gold remains bullish, but volatility is increasing. If the Federal Reserve cuts rates by 0.5%, we expect the precious metals market to rise further."
Regarding gold's short-term technical outlook, Bednarik pointed out that gold prices showed strong upward momentum on Thursday. The 38.2% Fibonacci retracement level of the June/July rally at $2411.20 per ounce provides recent support, while the 23.6% Fibonacci retracement level at $2438.80 per ounce forms resistance.
Bednarik stated that the daily chart shows technical indicators supporting the continuation of the bullish trend in gold prices. The technical indicators have clearly turned upward but remain at neutral levels. Meanwhile, gold prices stay above the bullish 100-day Simple Moving Average (SMA) and the 200-day SMA.
She added that from a short-term perspective, technical indicators on the 4-hour chart indicate an upward bias in gold prices, but momentum seems limited. Gold prices are currently trading above a slightly weak 100-period SMA, while the 20-period SMA and 200-period SMA lack strong direction below the gold prices. Lastly, technical indicators are entering positive territory, showing a moderate upward trend, but not enough to confirm a new round of gold price increase.
