Gold prices stabilize amid expectations of a lower US interest rate hike

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Gold prices stabilize amid expectations of a lower US interest rate hike

 Gold hits 4-week peak because of falling US dollar

 Gold prices rose within the European market on Monday, extending its gains for the fourth consecutive day, recording the very best level in four weeks, because of the decline of the US dollar against a basket of global currencies, and continuing after the last meeting of the Federal Reserve System .

 The purchases of the valuable metal as a safe haven were also activated, following data that showed the continued stagnation of the US economy during the second quarter of this year, which is predicted to cast a negative shadow on the global economy.

  the foremost important events affecting the gold market

 Most investors now estimate that the US Federal Reserve System will raise interest rates by only 50 basis points at its next meeting in September to curb the severity of the economic slowdown, while others expect the US Federal Reserve System to raise rates by another 75 basis points, to regulate inflation.

 This US dollar-denominated gold paid rock bottom cost to other currency holders, which increased the appetite for investors to extend their holdings of bullion, especially with the weakness of the dollar and approaching its lowest levels in three weeks against its competitors from other major currencies.

 Moreover, investors' fears of economic recession within the United States continued with inflation continuing to record high levels, which prompted investors to hunt gold as a safe haven in times of economic crisis to hedge against the risks of recession and inflation.

 Investors are now focused on the monthly US jobs report due on Friday, which can influence the Fed's roadmap.

 On the opposite hand, holdings of the SPDR Gold Trust - the world's largest gold-backed trading fund - rose 0.06% to 1005.87 tons on Friday.

 On the opposite hand, disappointing Chinese economic data affected investors' appetite for riskier assets

 The US dollar doesn't rule out more losses

  •  DXY accelerates the corrective decline to the 105.30 area.
  •  The minor pair immediately appears on the downside at 104.75.

 DXY is traveling in the fourth consecutive session with losses and reconsidering the 105.30 area at the start of the week.

 The index broke below the pattern followed before the FOMC held several sessions, thus setting the stage for further declines on the short term horizon. However, immediate support is now seen at the 55-day temporary simple moving average at 104.75 before the 5-month support line around 103.85.

 The near-term outlook for DXY remains constructive while crossing this 5-month support line near 104.00.

 Additionally, the broader bullish view remains in situ while above the 200-day SMA at 99.49.

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