Gold is currently stabilizing at all-time highs as traders eagerly anticipate the release of US Retail Sales data as well as the Federal Reserve policy decision on interest rates. The likelihood of a larger 0.50% cut to Fed base rates is increasing, which could potentially boost the attractiveness of Gold. As analysts project a 10-year secular bull trend beginning for commodities, including Gold, the metal’s outlook remains positive.
The price of Gold hit an all-time-high of $2,589 on Monday amidst market speculation that the Fed will implement a double 0.50% cut to interest rates at its upcoming meeting. This expectation is favorable for Gold since it reduces the opportunity cost of holding the metal, making it more appealing to investors. The upcoming US Retail Sales data release could influence the Fed’s decision on interest rates. A higher-than-expected figure may indicate a stronger economy, potentially leading to a smaller rate cut and negatively impacting Gold. Conversely, a lower Retail Sales figure could fuel speculation of a larger rate cut, benefiting Gold.
Analysts are suggesting that commodities, including Gold, are entering a new bullish super-cycle. With valuations comparable to those seen in 1971 and 2000, there is a belief that commodities are undervalued and poised for a decade-long bull market. Technical analysis indicates a bullish trend for Gold in the short, medium, and long-term. While the metal’s price has plateaued in the $2,580s, a correction is expected to be short-lived before Gold continues its upward trajectory.
Gold’s Relative Strength Index (RSI) suggests that the metal is not yet overbought, but is approaching that level. If Gold enters the overbought zone, traders may be advised to avoid adding to long positions. In the event of a correction, key support levels lie at $2,550, $2,544, and $2,530. The Retail Sales data released by the US Census Bureau provides insights into consumer spending, a major driver of the US economy. A high Retail Sales figure is typically bullish for the US Dollar, while a low figure is bearish.
Overall, Gold’s current stability at all-time highs, coupled with market expectations of a larger rate cut by the Fed, signals a positive outlook for the metal. As commodities, including Gold, are believed to be entering a new bullish super-cycle, investors may anticipate further upside potential for the precious metal in the coming years.
