Gold price has seen a 0.73% increase as traders anticipate the Federal Reserve (Fed) to maintain steady rates. This rise is attributed to the expectation of lower rates post the Covid-19 reopening inflationary spike. Currently, XAU/USD is trading at $2,427.
The market sentiment remains positive ahead of the Fed’s decision later today. US Treasury bond yields have decreased, leading to a 0.20% drop in the US Dollar Index (DXY) to 104.24.
Geopolitical tensions in the Middle East, coupled with safe-haven demand, have contributed to the surge in bullion prices. Recent events, such as Hezbollah’s attack on Israel and the killing of Hamas leader Ismail Haniyeh in Iran, have heightened the need for safe-haven assets like Gold.
The outcome of the Fed’s meeting is eagerly awaited, with expectations of maintaining interest rates within the 5.25%—5.50% range. However, there are speculations of a possible rate cut in the September meeting.
Daily Market Update: Gold Price Surge Signals Fed Rate Cut
- US ADP Employment Change for July fell short of estimates at 122K, below the forecasted 150K.
- Employment Cost Index (ECI) dropped from 1.2% to 0.9% QoQ, lower than the expected 1%.
- Pending Home Sales in the US rose by 4.8% MoM in June, surpassing predictions after May’s decline.
- CME FedWatch tool suggests a 25 bps rate cut in the upcoming September meeting.
- Upcoming data releases include July ISM Manufacturing PMI and Nonfarm Payrolls later this week.
Technical Analysis: Gold Price Consolidation Above $2,400
According to XAU/USD’s daily chart, the uptrend remains strong, with a temporary pause around $2,400. Momentum favors buyers, but economic news and geopolitical risks could impact Gold prices.
If Gold surpasses $2,450, the next resistance levels are $2,483 and $2,500. On the downside, support levels are at $2,376, $2,359, and $2,331.
Insights on Gold Investment: FAQs
Gold has historical significance as a store of value and safe-haven asset. Central banks hold Gold reserves to maintain economic stability. Gold prices are influenced by various factors, including geopolitical events, interest rates, and USD movement.