Gold Price Forecast Weekly: Buyers Regain Control after Profit-Taking Dip Post FED
Following the Fed's rate cut, gold saw volatility this past week due to profit-taking; but, strong demand for safe haven assets indicates...
Quick overview
- Gold experienced volatility after the Fed's rate cut, initially surging to a record high before retreating due to profit-taking.
- Fed Chair Jerome Powell's cautious remarks tempered expectations for aggressive rate cuts, leading to a rebound in the U.S. dollar and a decline in gold prices.
- Despite short-term fluctuations, strong safe-haven demand and central bank buying, particularly from China, continue to support gold's long-term bullish outlook.
- Technical indicators suggest that if gold maintains support around its 20-day average, it could target $4,000 as the next key resistance level.
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Following the Fed’s rate cut, gold saw volatility this past week due to profit-taking; but, strong demand for safe haven assets indicates that the route toward $4,000 is still intact.
From Record Highs to Sudden Reversal
Gold initially surged above $3,700 after the Federal Reserve delivered a 25 bps rate cut to 4.25%, briefly touching $3,707.42—a fresh all-time high. Yet, the rally quickly faded as traders booked profits, dragging prices back down by $80 to $3,627.
Fed Chair Jerome Powell struck a notably cautious tone, calling the move a “risk management cut” rather than the start of a deep easing cycle. His remarks cooled expectations for aggressive rate reductions this year, disappointing markets that had priced in up to 150 bps of cuts.
Market Response: Dollar Strength, Gold Weakness
The immediate reaction to the Fed decision was a weaker dollar and stronger gold. But as Powell emphasized resilient consumer demand and labor market risks, sentiment shifted. The U.S. dollar rebounded, gold slipped, and traders adjusted to the Fed’s less dovish stance.
Still, safe-haven demand remains intact. Central bank buying—particularly from China—and broader geopolitical uncertainties continue to lend underlying support for bullion, even amid short-term volatility.
Buyers Step Back In: Key Technical Support Holds
After the $80 drop, buyers returned strongly by week’s end. Gold rallied nearly $60 from the low, closing at $3,685. The 20-day SMA (gray) provided a solid floor, reinforcing the broader bullish trend.
Technical traders now see $4,000 as the next key resistance, provided gold maintains support around its 20-day average. Despite Powell’s cautious tone, momentum suggests the long-term trajectory still favors higher prices.
Looking Ahead: Key Data on Deck
The upcoming U.S. PCE price index for August will be closely monitored. A cooling in inflation could revive dovish expectations and give gold another push higher.
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