Gold Climbs 0.25% Amid US CPI Report and Fed Rate Cut Speculation: Key Insights

During the Asian session on Wednesday, gold prices edged higher by 0.25%, positioning XAU/USD at $2,520. This increase comes as traders await the critical August US inflation report, which could offer clues about the Federal Reserve’s next move on interest rates.

Gold’s resilience can be attributed to weaker US Treasury bond yields, which fell ahead of the Consumer Price Index (CPI) release. Lower yields reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors.

The market’s attention is also focused on the first presidential debate between Vice President Kamala Harris and former President Donald Trump, which could sway financial market sentiment.

As geopolitical and economic developments unfold, gold’s status as a safe-haven asset remains a key consideration for traders.

Gold price resumes the rise – Forecast today

Gold price provided clear positive trades yesterday to reach 2520.00$ level, and it needs to get positive momentum that assist to push the price to surpass the current areas and achieve additional gains in the upcoming sessions,… pic.twitter.com/dDePfKwMxD

— TMG Forex Signals (@TradingTmg) September 11, 2024

Key Figures:

• Gold price: $2,520, up from daily lows of $2,500.
• US 10-year Treasury yield: Down as investors await CPI figures.

Federal Reserve Rate Speculation Increases

Gold’s recent uptick is also tied to growing expectations of a Federal Reserve rate cut. The latest US jobs report revealed that fewer people were added to the workforce than anticipated, though the Unemployment Rate showed a slight improvement.

This mixed economic data gives the Fed more room to pursue a dovish policy without fear of overheating the economy.

According to the CME FedWatch Tool, the odds of a 50 basis point (bps) rate cut at the upcoming Fed meeting have increased to 33%, while there’s a 67% likelihood of a 25 bps cut.

A Reuters poll supports this sentiment, with 92 of 101 economists predicting a 25 bps reduction during the Fed’s September 17-18 meeting.

Relevant Statistics:

• Odds of 50 bps rate cut: 33%
• Odds of 25 bps rate cut: 67%
• Economists expecting 25 bps cut: 92 of 101

Global financial markets are in a more cautious mood, with price fluctuations of major financial assets limited as investors await the #US. Consumer Price Index ( $CPI ) report to be released on Wednesday.

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— MoMo—(Share accurate gold trading signals) (@XAUUSD__momo) September 11, 2024

Gold Technical Analysis: Key Resistance Levels in Play

From a technical standpoint, gold is testing critical resistance near the $2,520 level. A decisive break above this region could pave the way for further gains, with the next target set higher.

The 50-day Exponential Moving Average (EMA) at $2,505.88 provides strong support, helping to maintain the current uptrend.

Moreover, the Relative Strength Index (RSI) stands at 61, signaling bullish momentum but nearing overbought conditions. Traders should monitor this closely, as a break above overbought levels could indicate an imminent price correction.

Technical Highlights

• Current price: $2,521.66
• Resistance: $2,520
• Support levels: $2,508.37 and $2,492.14
• RSI: 61.33, approaching overbought territory

Conclusion

Gold prices continue to show strength amid a mix of economic data and political developments. As traders anticipate the Federal Reserve’s next move and monitor inflation data, gold remains a focal point for both short-term gains and long-term hedging strategies.