Gold Prices Hit New All-Time Highs Above $2,550 on Fed Rate Cut Expectations:
Gold prices have rallied to unprecedented levels, breaking above $2,550 per ounce, as recent U.S. economic data suggests the Federal Reserve is likely to lower interest rates in its next meeting. At the time of writing, the XAU/USD pair is trading at $2,552, up 1.67%, after bouncing back from a daily low of $2,511.
The surge in gold prices reflects growing market anticipation that the U.S. Federal Reserve will take a dovish stance on interest rates. With economic data signaling a slowdown, the Fed is expected to cut rates to stimulate growth, which has boosted demand for safe-haven assets like gold. Lower interest rates tend to weaken the dollar, making gold more attractive to investors as a store of value.
Gold's continued upward momentum signals investor confidence in the precious metal, driven by its role as a hedge against inflation and currency depreciation. As speculation mounts ahead of the Fed’s decision, gold prices may remain elevated, with potential for further gains if rate cuts are confirmed.
Daily digest market moves: Gold price surges post US jobs and inflation data:
- Bureau of Labor Statistics (BLS) revealed that Initial Jobless Claims for the week ending September 7 rose 230K as expected, up from 228K on the previous number.
- August's Producer Price Index (PPI) rose by 1.7% YoY, slightly below estimates of 1.8%, while core PPI increased from 2.3% to 2.4%, below expectations of 2.5%.
- Monthly, headline and core PPI increased compared to the previous month's reading. Headline PPI expanded by 0.2%, exceeding the 0.1% forecast, and core PPI rose by 0.3%, up from 0.2%.
- Today’s data and Wednesday’s Consumer Price Index (CPI) have cemented a 25 bps rate cut, sponsoring Gold’s rally ahead of the Fed’s meeting.
- Data from the Chicago Board of Trade suggests the Fed will cut at least 98 basis points this year, down from 108 a day ago, according to the fed funds rate futures contract for December 2024.
Technical outlook:
Gold price clings to $2,500 despite posting losses: Gold prices skyrocketed to new all-time highs (ATH), clearing on its way north the previous ATH at $2,531 and the $2,550 figure. Momentum accelerated to the upside despite the inverse correlation between bullion prices and US Treasury yields breaking during the day.
If XAU/USD extends its uptrend, the next resistance would be the psychological key levels like the $2,575 mark, followed by the $2,600 figure.
For a pullback, sellers must clear $2,550, followed by the August 20 high at $2,531 before aiming toward $2,500. On further weakness, the next support would be the August 22 low at $2,470, followed by the May 20 peak at $2,450.
