As Gold continues to climb higher above the key $2,700 level and reaches fresh all-time highs, interest rates globally are projected to decline further. Many major central banks are expected to enact interest rate cuts, supporting the non-yielding nature of Gold. XAU/USD is trending higher, following the old saying “the trend is your friend,” as technical traders continue to remain bullish on Gold.
Central banks around the world are accelerating their easing cycles by cutting interest rates. The European Central Bank (ECB) recently lowered its deposit rate by 25 basis points, marking an acceleration in its easing cycle. Analysts predict that the ECB may continue with back-to-back 25 bps cuts until policy rates reach a certain neutral range. Japan has also experienced a fall in inflation data, raising doubts about the Bank of Japan’s planned interest rate hikes. Similarly, the Bank of England (BoE) and Bank of Canada (BoC) are expected to cut interest rates in upcoming meetings.
Despite strong US data favoring a less aggressive approach from the US Federal Reserve, Gold remains on an upward trajectory. US Retail Sales showed a higher-than-expected rise in September, while Initial Jobless Claims data indicated a resilient labor market. Markets are currently pricing in a 92% chance of a rate cut in November. Despite potential headwinds, the overall trend in Gold remains strong.
On the technical analysis front, Gold has reached an all-time high and broken above the $2,700 level. The Relative Strength Index (RSI) is overbought, suggesting caution for long-holders. A break above $2,714 could lead to further upside, with support levels at $2,700 and $2,685. The strong uptrend in Gold indicates that any corrections are likely to be short-lived compared to the overall bullish trend.
The Retail Sales economic indicator, released monthly by the US Census Bureau, measures the total receipts of retail and food stores in the United States. This data reflects the rate of changes in sales and is considered a key indicator of consumer spending. A high reading is seen as bullish for the US Dollar (USD), while a low reading is considered bearish. Retail Sales data is closely followed by traders and investors for insights into the health of the US economy.
