Xauusd Steady On Rate Cut Hopes

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Xauusd Steady On Rate Cut Hopes

Xau/Usd Steady On Rate Cut Hopes

The XAU/USD prices remain strong as we are only a few hours away from Powell's testimony in Congress. This is a sign that the market players are hedging against unnecessary risk, as any talks about rate cuts will further weaken the US Dollar.

That's why when we look at Gold, Silver, and even currencies such as EUR/USD and GBP/USD, there's a common theme... The US dollar is in a weaker position than all of them.

The recent NFP report showed weak employment data and was rejoiced by the US stock markets. However, this has increased the odds of rate cuts by the US Federal Reserve which is not so great for the US Dollar. However, it presents a perfect opportunity for the XAU/USD and Silver.

Once we get clarity on the timing of the rate cuts from Fed, XAU/USD will become stronger as more investors will join the party. During July, the ETF positions in Gold will likely increase which will be the first such instance since the May of 2023.

Additionally, this is the 2nd month that no addition was made to the gold reserves in China. This is not a sign that China is refraining from buying Gold or that Gold has lost its appeal. Instead, China is waiting for the Gold prices to become more affordable.

So, it is safe to say that the Asian demand for Gold is still pretty strong, and China's situation is just temporary. Right now, a lot of central banks around the world are storing a part of their wealth in the form of Gold bullion. This perfectly highlights the Gold's status as a store of value and its role in protecting against risks.

Once the US CPI is released, we expect the Gold prices to turn higher and target the next resistance levels.

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