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Major institutions have also revised their recession forecasts, reflecting improving market sentiment. Goldman Sachs reduced its US recession probability from 45% to 35%, while Barclays dismissed recession risks entirely. J.P. Morgan now places the probability below 50%. This reduction in recession risk weakens demand for gold, which traditionally benefits from economic uncertainty. The shift in outlook indicates stronger investor confidence in equities and riskier assets.
On the other hand, the rising US Treasury yields and a stronger US dollar also reduced the appeal of gold. These macro shifts signal a short-term bearish environment for precious metals. However, the inflation data continues to soften, and the market still expects two Federal Reserve rate cuts, starting in September. This outlook supports gold in the longer term. Moreover, geopolitical uncertainty, including US-Iran tensions and the Russia-Ukraine crisis, is increasing market instability. Despite the short-term correction, the bullish trend could resume after the correction.
Gold (XAU) Technical Analysis
Gold Daily Chart – Support from 50-Day SMA
The daily chart for gold shows that the price found support at the 50-day SMA and rebounded higher. After hitting this support, the price formed a bullish hammer candle. The candle that followed developed into a consolidation pattern, indicating that gold is establishing support at this level.
Moreover, the RSI consolidates at the midline, which suggests that prices are in a consolidation phase rather than a strong downtrend. Despite the sideways movement, the price remains above both the 50-day and 200-day SMAs, which confirms that the overall trend remains positive.
A break above $3,370 will serve as confirmation that gold is ready to move higher.
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