Gold price holds close to record levels as traders look toward the Federal Reserve's key interest rate decision expected later today. Markets are betting on a 50 basis point rate cut, which could fuel further gains for the precious metal. Gold has been trading near the all-time peak of $2,589.78 an ounce, reflecting investor confidence in the safe-haven asset amidst ongoing global uncertainty.
Key Takeaways:
Gold price holds near record highs around $2,589 as traders anticipate a 50 basis point Fed rate cut, which would further boost the metal’s safe-haven appeal.
Expectations for a more aggressive rate cut persist despite recent strong U.S. economic data, such as retail sales and inflation numbers.
Geopolitical risks, including Middle Eastern tensions and U.S. political uncertainty, continue to underpin demand for gold.
Technically, gold is eyeing a move above the $2,600 level, with strong support near the $2,530–$2,525 zone. If support holds, the price could reach new highs above $2,610, while a break below $2,500 might signal a deeper correction.
Fed Rate Cut Fuels Gold Price Strength
The primary driver behind gold price holds near these highs is the anticipation of a Federal Reserve rate cut, with markets now pricing in a 50 basis point reduction. The CME FedWatch Tool shows increasing market conviction that the Fed will pursue an aggressive cut, despite recent strong retail sales and inflation data.
Lower interest rates typically favor gold as they reduce the opportunity cost of holding non-yielding assets like bullion. Furthermore, concerns about the U.S. labor market's weakening and ongoing global economic uncertainties contribute to gold's safe-haven appeal.
Geopolitical Risks and Global Economic Uncertainty Support Gold
Apart from the Federal Reserve decision, several global risk factors continue to provide support to gold prices. Ongoing geopolitical risks, including tensions in the Middle East and uncertainty ahead of the U.S. presidential elections, have added further demand for the metal.
Despite the strong fundamentals for gold, other precious metals like silver and platinum have lagged behind. Silver futures fell 0.5% to $30.837 per ounce, while platinum futures were down 0.5% at $983.90 per ounce.
Technical Analysis: Gold Price Holds Strong, Eyes New Highs
From a technical perspective, gold price holds near record levels, and bulls are waiting for a move beyond the $2,589–$2,590 region, which represents the all-time peak touched earlier this week. A sustained move above this level would likely trigger fresh buying interest and push the price higher towards the psychological $2,600 mark, with the next potential resistance around the $2,610 level. This zone represents the upper boundary of a short-term ascending channel that began in late June when gold was trading below $2,400.
If gold breaks through the $2,610 barrier, it could signal a breakout and open the path for further gains, possibly leading to an extension of the well-established uptrend. The next target for bulls could be $2,625 or higher, depending on market momentum and reactions to the Federal Reserve's policy direction.
Key Support Levels to Watch
On the downside, gold has strong support near the $2,530–$2,525 range, which is a critical horizontal resistance-turned-support zone. If this level holds, any dips could be viewed as buying opportunities for those expecting further gains. A break below this zone, however, could open the door for deeper corrective moves, with the next significant support around the $2,500 psychological level.
Should gold fall below the $2,500 mark, it may prompt more selling pressure, dragging prices toward $2,470. This area is bolstered by the 50-day Simple Moving Average (SMA) and the lower boundary of the aforementioned ascending channel. A decisive break below $2,470 could shift the market sentiment to a more bearish outlook.
Indicators to Watch
The Relative Strength Index (RSI) on the daily chart is currently hovering near overbought territory, signaling that bullish momentum may be getting stretched. While this could indicate that gold is due for a short-term pullback, the broader trend remains firmly upward as long as key support levels hold.
Traders should also keep an eye on the Moving Average Convergence Divergence (MACD), which continues to point to upward momentum. However, any signs of divergence or a cross-over could suggest that the current rally may be losing steam.
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