Gold Price Rises to $2,505 Amid Fed Rate Cut Speculations and Geopolitical Tensions
Gold (XAU/USD) continues to gain traction around $2,505 during the early Asian session on Monday, bolstered by rising expectations that the US Federal Reserve (Fed) might cut interest rates in September.
Investors are eagerly awaiting key economic indicators, including the first reading of the US S&P Global Purchasing Managers Index (PMI) and a speech from Fed Chair Jerome Powell later this week, which could provide further direction for the precious metal.
On Friday, gold prices surged to an all-time high as the market increased bets on a September rate cut by the Fed.
Last week’s US economic data presented a mixed picture: while Retail Sales exceeded expectations, both the US Producer Price Index (PPI) and Consumer Price Index (CPI) signalled that inflation pressures are easing.
In a stunning turn of events, gold has skyrocketed to a new high, hitting $2,505 per ounce, as reported by every financial guru on X except, apparently, mainstream media who are probably too busy covering the rise of pet rocks or something equally riveting. The #dollar,… https://t.co/TXzbwah92D
— Crypto Piggie (@DatCryptoPiggie) August 17, 2024
Adding to economic concerns, US Housing Starts dropped by 6.8% in July to 1.238 million units, down from a 1.1% increase in June.
This marks the lowest level of housing starts since 2020 and reflects growing apprehension about the overall health of the economy, especially after softer inflation and labor market data.
The prospect of lower interest rates supports gold by reducing the opportunity cost of holding non-yielding assets like bullion.
Federal Reserve Bank of Chicago President
Austan Goolsbee recently noted that the US economy shows no signs of overheating, suggesting that Fed policymakers might need to be cautious about maintaining restrictive policies for too long.
The CME FedWatch Tool now indicates a 76% probability of a 25 basis point rate cut during the Fed’s September meeting.
Geopolitical Tensions Drive Safe-Haven Demand
Ongoing geopolitical tensions in the Middle East and the war in Ukraine continue to drive demand for gold as a safe-haven asset.
Over the weekend, the conflict between Hezbollah and Israel intensified, despite ongoing diplomatic efforts to de-escalate the situation. The Guardian reported that Saturday’s Israeli attack was one of the most devastating for civilians since hostilities began in October.
JUST IN: Gold has made a new all-time high of $2,505 pic.twitter.com/FPjEjPVwKe
— BlockNews.com (@blocknewsdotcom) August 16, 2024
Such geopolitical uncertainties further bolster gold’s appeal as investors seek refuge in the precious metal.
Gold Price Forecast
Gold is currently trading at $2,499.88, showing a slight dip as the market takes a breather following its recent rally.
The pivot point at $2,477.51 is crucial; maintaining levels above this point keeps the bullish momentum intact, while a drop below could signal further declines.
The 50-day Exponential Moving Average (EMA) at $2,454.44 provides additional support.
Key Levels to Watch:
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