Will Gold Hit $2,370? Rising Speculation on Fed’s Rate Cut Impact

Gold’s price continues to climb, recently reaching $2,367 and peaking at $2,370 during intraday trading.

This surge is primarily fueled by growing speculation that the US Federal Reserve may initiate rate cuts by September, a move that has simultaneously softened the US dollar and propelled gold prices upward.

Moreover, escalating political tensions both within Europe and worldwide have also contributed to the heightened appeal of gold. However, the ongoing suspension of gold purchases by China’s central bank for the second month in a row could restrict further price increases.

Federal Insights and Global Uncertainties Fuel Market Speculation

As investors digest the potential for a US rate cut, all eyes are on Federal Reserve Chair Jerome Powell’s upcoming semi-annual testimony. Market participants are also anticipating insights from Fed members Michelle Bowman and Austan Goolsbee.

Concurrently, the release of the US Consumer Price Index (CPI) inflation data on Thursday is expected to play a crucial role in shaping market dynamics. Jerome Powell recently emphasized the Fed’s careful approach, stating, “We will act on a meeting-by-meeting basis,” highlighting the necessity of more robust data to consider reducing rates.

This cautious stance from the Fed has boosted the attractiveness of non-yielding assets like gold, as seen with the CME FedWatch tool now indicating a 74% probability of a September rate cut.

Technical Outlook and Strategic Trading in the Gold Market

The gold market is currently trading around $2,368.020, showing a modest increase. Prices have consolidated near the $2,366.521 level, aligning with the 50-period Exponential Moving Average (EMA).

The Relative Strength Index (RSI) standing at 54 suggests a neutral market condition, potentially heralding significant price movements. The $2,366.521 pivot point acts as a robust support, anchoring the current price range.

Resistance levels are set at $2,379.352, $2,391.215, and $2,402.888, which could challenge upward trends. Conversely, support levels at $2,363.530, followed by $2,355.365 and $2,354.352, are crucial for stabilizing any downward shifts.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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