Gold Prices Surge to Two-Week High Before Sharp Decline on Strong US Data

Gold prices saw fluctuations this week, initially climbing to a two-week high of $2,366 on Thursday due to a surprise rate cut by the Swiss National Bank and weaker-than-expected US data. However, stronger US PMIs released on Friday caused a sharp decline, with spot gold trading at $2,319, down nearly 1.70% on the day and 0.55% for the week. The MCX August contract closed at Rs 71,594, down 1.37%.
The Swiss National Bank’s rate cut contrasts with the Bank of England and the People’s Bank of China, which kept their rates unchanged. Mixed US economic data, including jobless claims, housing starts, and Philadelphia Fed Business outlook, were offset by stronger-than-expected S&P Global US PMIs. This supported the US Dollar, which rose to a high since May.
The Federal Reserve’s hawkish stance, conveyed in its latest meeting, along with a strong US Dollar and increasing bond yields, put pressure on gold. Fed officials emphasize a data-dependent approach to future rate cuts, with the probability of a September rate cut currently at 65%.
Geopolitical tensions involve the US expressing support for Israel against Hezbollah, while Swiss gold exports fell sharply in April. Upcoming US data, including GDP and PCE deflator inflation, will be crucial for market direction.
Overall, gold is expected to remain under pressure in the short term, with major support levels at $2300 and $2277, and resistance at $2385/$2400. Despite short-term challenges, the medium to long-term outlook remains bullish.