Gold surges further, edging closer to its record high. Fueled by a recent dip in US inflation, the price of gold is currently trading at $2,433 per ounce, just shy of the all-time high of $2,450. This upswing comes amid growing expectations for a shift in Federal Reserve policy. Softer inflation data has boosted bets on rate cuts, with a significant portion of investors (76%) anticipating a reduction by September. The market is even pricing in two cuts by year-end, which could bring the federal funds rate down to a range of 4.75%–5.00%. This would significantly weaken the dollar and heighten the appeal of gold as a safe-haven asset.
Gold extended its gains on Monday, trading just below the all-time high of $2,450 reached in the Asian session, amid rising expectations that major central banks, including the Federal Reserve, might ease policy in 2024. XAU/USD is at $2,433, up 0.80%.
Market sentiment is mixed but slightly positive, with the S&P 500 and NASDAQ 100 rising while the Dow Jones remains nearly flat. Softer-than-expected U.S. consumer inflation data has fueled speculation that the Fed could cut borrowing costs as early as September. According to CME FedWatch Tool data, there is a 76% chance of a 25 bps rate cut in September, with two cuts anticipated by the end of the year, potentially lowering the fed funds rate to 4.75%–5.00%.
This week, Federal Reserve speakers will dominate the U.S. economic docket ahead of the latest Fed meeting minutes on Wednesday. On Thursday, U.S. Initial Jobless Claims and the Chicago Fed National Activity Index are expected to indicate a cooling labor market.
Gold (XAU/USD) Market: Technical Analysis and Forecast
The gold market is nearing the psychologically significant $2,450 level, with some analysts eyeing a potential test of $2,500. However, this bullish momentum faces a crucial hurdle.
Sustaining prices above $2,400 is essential. Technical indicators suggest potential bearish sentiment between $2,500 and $2,426. While current indicators are broadly bullish, the recent formation of a doji candlestick pattern at the trend’s peak raises a cautionary flag.
Dojis often signal indecision, and in this case, they could indicate a potential reversal. Increased market volatility, as suggested by Bollinger Bands, could amplify a bearish correction. If such a correction occurs, the $2,400 level will likely serve as the first line of defense for bulls. Holding this level would be a critical sign of continued bullish strength and a potential move towards $2,500.
Get free access to our lifetime VIP membership. Join us here.
Leave a Reply