Gold increases sharply: Investors look for a safe place
The US dollar rallied early Wednesday as risk-off sentiment dominated the market. Asian shares came under pressure after disappointing tech earnings reports from major companies such as Alphabet and Tesla. Alphabet achieved good revenue and profits but needed time to see results from its investment in artificial intelligence, while Tesla dropped 7% due to profits not meeting expectations and postponing the Robotaxi event. Fears of a Chinese economic slowdown also supported safe-haven demand for the greenback.
On Tuesday, the US dollar rebounded significantly on market jitters ahead of important earnings reports from US companies and a sharp rise in Treasury yields. Investors take profits on USD short positions ahead of Wednesday's preliminary Global Manufacturing and Services PMI data. Weak PMI data could spark recession fears, creating fresh demand for the US dollar.
Gold prices could benefit from this scenario if concerns about the US economy reinforce dovish Fed expectations. The market is currently pricing the possibility of the Fed cutting interest rates in September at a 97% probability. All eyes are on the US Q2 GDP report on Thursday and June PCE inflation data on Friday to monitor gold price movements.
Note price range:
Sell zones: 2424 - 2426
Stop loss: 2430
Take profit 1: 2414
Take profit 2: 2400
Sell zones: 2440 - 2442
Stop loss: 2446
Take profit 1: 2430
Take profit 2: 2420
