XAU/USD Analysis: Will the Federal Reserve Cut Rates in September?
- US Consumer Price Index softer than expected in July.
- Investors betting on Fed rate cut in September.
- XAU/USD could slide below $2,438.80 support level.
The US Dollar weakened as investors anticipate a Federal Reserve rate cut following softer-than-expected inflation data. The July Consumer Price Index (CPI) showed a slight decrease from the previous month, prompting speculation of a rate cut. This news initially boosted XAU/USD to $2,479.80, but the pair later declined as risk appetite increased.
Technically, XAU/USD is holding above the 23.6% Fibonacci retracement level at $2,438.80, indicating limited bearish potential. However, a break below this support level could lead to further downside. The 4-hour chart suggests a possible continuation of the slide, with indicators showing a bearish momentum.
With the possibility of a Fed rate cut in September, XAU/USD could face increased volatility. Support levels to watch are $2,438.80 and $2,426.90, while resistance levels are at $2,458.70, $2,471.10, and $2,483.70.