Gold Price Surge to $2,520: Fed Rate Cut Speculation and Geopolitical Tensions Propel Gains
Gold (XAU/USD) has maintained its bullish momentum, currently trading near $2,517 after reaching an intraday high of $2,520.02.
The price has surged, setting a new all-time high, driven by expectations of a dovish Federal Reserve and continued selling pressure on the US dollar. These factors have significantly bolstered gold’s appeal as an investment, particularly as a safe-haven asset amid ongoing global uncertainties.
However, optimism surrounding a potential ceasefire in Gaza and a slight recovery in the US dollar, which had hit its lowest level since January, have capped further gains in gold.
Fed Rate Cut Expectations Drive Gold Prices Higher
The anticipation of Federal Reserve rate cuts has been a key driver behind the recent rally in gold prices. Investors are widely expecting the Fed to reduce interest rates by 25 basis points (bps) during its September meeting.
This expectation has put downward pressure on US Treasury yields and the US dollar, contributing to gold’s new record high.
Gold is trading at $2,520! 🚀 The bulls are pushing higher—will we see new all-time highs soon? #Gold #XAUUSD #Forex #Trading #Investing #GoldPrice #MarketAnalysis #ForexTrader #ForexMarket #PreciousMetals #BullMarket pic.twitter.com/e9byCFkql1
— Brian Ngugi Wainaina (@Ngugi_Wainaina_) August 20, 2024
According to the CME Group’s FedWatch Tool, there is currently a 70% chance of a September rate cut.
Additionally, a Reuters poll indicates that a slim majority of economists now predict a 25 bps cut at each of the remaining three meetings in 2024.
However, Fed Governor Michelle Bowman has cautioned that inflation remains above the Fed’s 2% target, which may temper expectations of aggressive rate cuts.
This combination of factors has further fueled the rise in gold prices, making it an increasingly attractive investment.
China’s Gold Import Quotas and Rising SPDR Holdings Boost Demand
In addition to the impact of Federal Reserve policies, China’s recent actions have also supported the upward momentum in gold prices. The People’s Bank of China (PBOC) has granted new gold import quotas to several Chinese banks, signalling expectations of increased demand.
This move suggests that China may be preparing for another significant round of gold purchases.
Furthermore, the holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, have risen to 859 tons, the highest in seven months.
This increase indicates growing investment demand for gold, reflecting a broader trend of investors seeking safe-haven assets in uncertain economic times.
These developments have further bolstered global demand for gold, contributing to its recent price surge.
China's Gold Imports Plummet as High Prices and Economic Woes Persist China's gold imports dropped 24% in July due to record prices and a weak economy. Could this signal trouble for global gold markets? #Gold #Economy #China https://t.co/39kHWoWFDU pic.twitter.com/4n3a2eMXVZ
— Sam Roth (@sciencenoteblog) August 21, 2024
Geopolitical Tensions Continue to Drive Safe-Haven Demand
Geopolitical tensions, particularly in the Middle East, have played a crucial role in supporting gold prices as well. The ongoing conflict between Israel and Hamas has kept investors on edge, driving demand for safe-haven assets like gold.
Despite ongoing efforts for a ceasefire, the conflict has resulted in significant casualties, with over 40,000 people killed in Gaza and more than 1,100 in Israel since October 7.
This heightened geopolitical risk has led to increased investor interest in gold, further boosting its price. As uncertainty in the region persists, the demand for gold as a secure investment is likely to remain strong.
Gold Price Outlook

The pivot point at $2,508.27 is critical, serving as a key support level for the ongoing uptrend.
If gold holds above this level, the bullish trend is likely to persist, with immediate resistance at $2,526.63, $2,543.74, and $2,559.85.
The 50-day Exponential Moving Average (EMA) at $2,476.15 further supports this outlook, signalling a strong underlying trend.
However, a break below $2,505 could lead to a correction, with support levels at $2,490.10, $2,470.54, and $2,451.82.
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