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Gold prices rose to a one-week high

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Gold prices rose to a one-week high, extending the gains from the previous session after the US Federal Reserve Chairman Jerome Powell made dovish remarks, bolstering expectations of an interest rate cut this month.

The price of spot gold rose by 0.1% to 1,419.64 USD per ounce at 08:40 a.m. ET, after earlier hitting its highest since July 3 at 1,426 USD. The precious metal gained 1.5% in the previous session.

Meanwhile, the US gold futures jumped by 0.6% to 1,421.60 USD per ounce.

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Jerome Powell’s testimony last night is giving gold a significant lift, with the market taking an indication that there is going to be a rate cut of 25 basis points coming soon. In his testimony to Congress, the Fed Governor pointed to broad global weakness clouding the US economic outlook amid uncertainty on the fallout from the Trump administration’s trade conflict with China and other nations.

Lower interest rates lower the opportunity cost of holding nonyielding bullion, making gold cheaper for investors holding other currencies. In addition to gold, prices of silver and platinum rose 0.3% each, while the price of Palladium gained 0.3%. Buying pressure on gold is likely to remain firm as investors will focus on precious metals as a store of wealth and hedge against market turmoil.

During the bull run from 1,280 USD, gold has had relatively few pauses and dips have been pretty shallow, indicating that underlying sentiment remains very, very positive. Gold rallied to a six-year peak of 1,438.63 USD per ounce last month, largely on the back of expectations of rate cuts by key central banks amid concerns over the global economy.

A break above 1,438 USD may lead to further buying orders with 1,500 USD being the next level traders looking to target.

Indicative of investor sentiment, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.8% on Wednesday.

Among the other precious metals, the price of the silver rose by 0.1% to 15.26 USD per ounce and platinum rose 0.4% to 827.76 USD. Palladium, meanwhile, fell by 0.5% to 1,581 USD per ounce, after earlier hit its highest since March 22 at 1,605.52 USD. The world’s top platinum miners kicked off talks with South Africa’s unions on Tuesday, with negotiations on wages expected to be tough.

Gold price analysis

Gold held on to its mildly positive tone through the early European session and is currently placed just below weekly tops, set earlier this Thursday.

The precious metal posted gains on Wednesday after the Fed Chair Powell hinted that the Fed was ready to cut rates. He cited the economic uncertainty but said that the federal deficit could potentially push interest rates higher.

Today, the price of gold is stable within its bullish channel. Stability around and above the 1,400 USD psychological resistance still supports the strategy of buying from each bearish level. The factors supporting gold gains remain standing, topped by rising global geopolitical and trade tensions, even after the optimism of renewed US-China negotiations to end the world’s biggest trade dispute that threatens global economic growth.

Gold prices today are still trying to hold the 1,400 USD psychological summit, which supports the strength of the uptrend. Stability above that peak will make the nearest resistance levels at 1,415 USD, 1,428 USD and 1,440 USD respectively, which supports the strength of the upward trend. On the downside, the nearest support levels for gold today are 1,410 USD, 1,395 USD, respectively. The precious metal is also rallying off technical support around the 1,380 USD price level which aligns with the 78.6% Fibonacci retracement of its August 2018 to June 2019 trading range.