Gold is currently trading close to its all-time high of $2,531 amid expectations of a potential interest rate cut by the Federal Reserve and a weak US Dollar. The size of the Fed’s cut at its September meeting is anticipated to impact the price of Gold. US CPI data released on Wednesday could also influence the Fed’s decision.
Investors are closely monitoring the movement of Gold as the debate continues regarding the Federal Reserve’s decision to cut interest rates at its September meeting. While a 25 basis points cut is expected, there are speculations that the Fed could opt for a larger 50 bps cut. A larger cut would make Gold more attractive as it is a non-interest-paying asset.
The release of the mixed US NonFarm Payrolls data failed to provide clarity on the size of the interest rate cut. Analysts are now turning their attention to the US Consumer Price Index (CPI) data for August to gain insights into the Fed’s decision. However, opinions vary on the impact of the data, with some suggesting that low inflation rates may render the data irrelevant.
Gold is benefiting from a weaker US Dollar, as the two are negatively correlated. The recent US presidential election debate outcome has led to a depreciation of the Dollar. Additionally, geopolitical tensions in regions like Israel and Ukraine are increasing demand for safe-haven assets like Gold.
Technically, Gold is on an uptrend towards the top of its range and the all-time high. A break above the current resistance level could result in further upside momentum. However, a close below a key support level could signal a shift in the bullish bias for Gold.
Overall, the outlook for Gold remains positive, with a potential breakout towards the $2,550 target. The precious metal is likely to benefit from the ongoing economic uncertainties and geopolitical tensions, driving demand from investors seeking safe-haven assets. The upcoming economic indicators and the Fed’s decision on interest rates will continue to influence the price of Gold in the near term.
