Gold Price Soars to Near All-Time Highs Amid Fed Rate Cut

  • Gold price enters a bullish consolidation phase near the all-time peak touched on Wednesday.
  • Bets for more Fed rate cuts keep the USD bulls on the defensive and underpin the commodity.
  • Concerns over the US/China economic outlook and geopolitical risks also benefit the XAU/USD.

Gold price (XAU/USD) has surged back towards its all-time peak following the Federal Reserve’s decision to initiate an aggressive rate cut, signaling the start of a policy easing cycle. The prospect of additional rate cuts by the Fed has weakened the US Dollar (USD), bolstering the appeal of the non-yielding yellow metal.

Factors Driving Gold Price Rally

  • The Fed’s jumbo rate cut and forecast for further reductions in borrowing costs have dampened USD strength, supporting gold prices.
  • Upbeat US macro data, including a decline in Weekly Initial Jobless Claims and positive manufacturing index, failed to lift the USD, benefiting gold instead.
  • Geopolitical risks, economic concerns in the US and China, and uncertainty surrounding the upcoming US presidential election have further boosted the safe-haven appeal of gold.

Despite a risk-on sentiment in global equity markets, gold remains poised to end the week on a positive note. The outlook remains favorable for bullish traders, with the Bank of Japan’s policy update expected to introduce volatility in the XAU/USD pair.

Technical Analysis and Outlook for Gold Price

From a technical standpoint, gold faces resistance near the $2,600 level, with the all-time peak at $2,613-2,615 acting as a crucial barrier. A breakout above this level could signal further upside potential for the precious metal. On the downside, support lies at $2,551-2,550, with key levels at $2,532-2,530 and $2,500.

Gold FAQs

  • Role of Gold: Gold serves as a store of value, a safe-haven asset, and a hedge against inflation and currency devaluation.
  • Central Banks and Gold: Central banks hold significant gold reserves to strengthen their currencies and instill trust in their economies.
  • Gold Price Factors: Gold has an inverse correlation with the US Dollar and risk assets, with geopolitical instability and economic conditions influencing its price.
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