Gold Breakout Continues

Gold prices advanced to fresh YTD highs again today as the safe-haven asset continues to appreciate against a backdrop of US data weakness. A drop in US consumer confidence, slower home price growth and a heavily lower Richmond Fed manufacturing data, have all contributed to bearish USD sentiment this week, creating room for gold prices to push higher.

US Data Worsening

Consumer confidence was seen falling to its lowest levels since August 2021, reflecting a worsening outlook among US households. On Monday, the flash PMI readings for August showed the manufacturing sector dipping further into negative territory at 47, down from 47.9 prior, below the 48.6 the market was looking for.

Fed Easing Expectations

Pricing for a further .2% Fed rate cut in November has jumped to over 60% this week from 50% at the end of last week as traders assess the incoming data trend. The expectation now is for a cut at the next two meetings. However, if we see USD data continue to weaken over this timeframe, this view is vulnerable to a dovish shift, creating deeper upside risks for gold prices.

USD Data & Powell Up Next

Looking ahead, there is plenty of USD-centric data/events to monitor tomorrow with final GDP, weekly unemployment claims and a slew of Fed speakers, including Fed chairman Powell, pose plenty of USD volatility risk. If we see the Dollar weakening further through the day, this should set gold up to continue higher through the end of the week.

Technical Views

Gold

The breakout move in gold continues with price pushing on firmly above the 2,350.59 level and broken bull channel highs. While above here, focus is on a continuation higher. Any correction lower should find support into those levels, keeping the bull trend intact.