Gold Price Rises to $4,260 as Fed Cut Bets and Global Risks Lift Demand
Gold (XAU/USD) started the week on a high note trading near $4,260 as investors scrambled to get out of the market due to growing...
Quick overview
- Gold (XAU/USD) is trading near $4,260 as investors seek safe havens amid rising global uncertainties and a U.S. government shutdown.
- Strong demand from central banks and ETFs is driving gold's rally, highlighting its appeal as a stable investment during turbulent times.
- The Federal Reserve's anticipated dovish policy and potential rate cuts are making the U.S. dollar less attractive, further boosting gold's appeal.
- Technically, gold is consolidating within a rising trend channel, with key support at $4,200 and potential targets at $4,325 and $4,380.
Gold (XAU/USD) started the week on a high note trading near $4,260 as investors scrambled to get out of the market due to growing uncertainty. Persistent trade tensions , the increasing risk of global conflict and the ongoing U.S. government shutdown have all led to renewed enthusiasm for the precious metal. Meanwhile, silver (XAG/USD) was hovering around $51.81 , down just 0.17% – showing that while investors are taking a bit of profit , safe haven sentiment remains intact.
Markets are also reacting to expectations that the Federal Reserve will embark on a more dovish policy, with traders fully betting on two further rate cuts later this year. This has had a knock on effect on the U.S. dollar making it less attractive – further boosting gold’s appeal. With the Fed now in its pre-meeting blackout period , the dollar will be vulnerable to any bad news and particualrly ahead of the US inflation report .
It’s all coming together to make gold a compelling hedge for both institutional and retail investors looking to protect their portfolios.
Institutional Demand Is Fueling Gold’s Rally
Gold’s resilience is being given a boost by strong demand from central banks and ETFs. These big players are steadily increasing their stake in the non yielding metal – seeking stability and protection in uncertain times. Analysts point out that global gold ETFs have been seeing a steady flow of new investment which suggests that the rally is driven by a combination of safe haven positioning and strategic diversification.
Global tensions have also weighed in. Reports of fresh conflict breaking out in Eastern Europe and attacks on vital energy infrastructure have spooked investors and highlighted gold’s reputation as a store of value when things go wrong. Meanwhile the protracted US government shutdown- now in its third week – has raised concerns over the economy and fuelled demand.
Even when the US Chinese trade talks have made some progress and US-China tensions have eased a bit, for now at least – gold’s uptrend is still looking solid.
Gold Technical Outlook and Trade Set up
Technically gold is in a phase of consolidation after peaking near $4,381 – the price has been hovering within a rising trend channel making a possible bear flag pattern. Support has held firm near the $4,200 0.618 fib level where a long lower wick and a bullish spinning top candle showed renewed buying pressure.
The 2 hour RSI is near 49, having recovered from weak levels but it still needs confirmation of a bullish reversal. A break above $4,270 could set off a move towards $4,325 (38.2% Fib ) and $4,380 – while failure to hold $4,200 may set gold back towards $4,137 or even $4,089, which would align with the 100-EMA and the base of the channel.
Trade Set up:
- Buy Zone: $4,210-$4,230 ( near fib support)
- Take Profit: $4,325 , extension to $4,380
- Stop Loss: Below $4,180
Traders should watch out for a bullish engulfing candle or a 20- EMA crossover before taking a trade. While momentum is still a bit cautious the big picture is that the trend is still in gold’s favor, supported by a solid fundamentals, a good technical structure and safe haven demand.
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