Gold: correlates to USD

During the week the price of gold was following its negative correlation with the US Dollar. As the USD was strengthening, so the gold was traded on lower grounds. The lowest weekly level reached was $2.358. However, Friday`s posted PCE data were a game changer, as the data was in line with market expectations, and increased odds for a Fed's rate cut in September. This sentiment pushed the US Dollar to the downside, while gold corrected the price to the upside, closing the week at level of $2.385.

The RSI index started its move toward the oversold market side, however, it reverted a bit at Friday`s trading session, ending the week at the level of 50. This implies that the market will hold its move toward the clear oversold market side. Moving averages of 50 and 200 days continue to move as two parallel lines with an up-trend, without any suggestion that the cross might occur anytime soon.

The FOMC meeting is scheduled for 31st July. This will be the date when all markets will be focused only on Fed's rate decision and rhetoric in an after the meeting conference. Some market nervousness should be expected around and on this date. From Friday`s PCE data, the market increased chances that the first rate cut will be in September, and investors are positioning accordingly. In this sense, there is a high probability that the price of gold will revert again toward the levels around 2.4K, to test it for one more time for its potential for upside. A further move to the downside, is not indicated on current charts for the week ahead.