Gold Analysis: Will Prices Break $2,600?
- Gold prices hit another record high at the start of this important week’s trading with gains reaching the $2,590 resistance level per ounce ahead of the US Federal Reserve meeting this week.
- During the meeting the US central bank will assess its monetary policy for the first time in more than four years.
- According to live gold prices, the latest bullion price rally, which extends from last week, precedes the US Federal Reserve meeting on September 17-18, which is widely expected to result in a US interest rate cut of at least 25 basis points.
However, opinions remain divided on the pace of the US central bank’s future monetary easing path, with some traders and economists now expecting a larger half-point cut this week. “Whether the Fed cuts rates by 25 or 50 basis points is important in the near term,” Ole Hansen, a commodity analyst at Saxo Bank A/S, said in a note to Bloomberg. he added, “The decision could send a stronger signal” about how the “FOMC views the current economic outlook,”.
Also, gold received support from a weaker U.S. dollar, which fell after an apparent assassination attempt on former President Donald Trump. According to gold trading platforms, the gold market has gained more than a quarter of its value this year and hit its latest record high on Friday, supported by signals from the U.S. Federal Reserve that it is shifting toward monetary easing. Central bank buying due to geopolitical tensions and retail interest also helped drive the advance. the analysts added, “A divided world burdened by geopolitical risks and debt will continue to support prices,”.
US Dollar Holds Lower Ahead of Fed Meeting
The US dollar index (DXY), which measures the greenback against a basket of major currencies, held its recent lows around 100.7 on Tuesday, hovering near a 14-month low ahead of the Federal Reserve’s two-day policy meeting, where it is expected to deliver a big cut in US interest rates. Currently, financial markets are pricing in a 67% chance that the Fed will cut rates by 50 basis points, up from 25% a month ago, while the odds of a modest 25 basis point cut are at 33%, according to CME’s FedWatch tool.
Furthermore, the forecasts come even after key inflation indicators for August came in hotter than expected last week, and despite the latest US jobs data pointing to signs of a slowing labour market. Also, investors are looking ahead to US retail sales and industrial production figures on Tuesday for more insights on the economy. Meanwhile, financial markets remain divided on whether the Bank of England will cut interest rates again this week, while the Bank of Japan is expected to keep its policy steady but signal further rate hikes.
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1Gold Price Forecast and Analysis Today:
According to today's gold analysts' expectations, the overall trend for gold prices is upward and may remain so until the financial markets and investors react to the US central bank's announcement this week of the amount of the US interest rate cut and the signals that follow the decision from the bank's policy statement and the governor's statements will determine the fate of the US dollar and consequently the price of gold, which receives more strong momentum from other aspects, whether from global geopolitical tensions and the continued abandonment of tightening by global central banks. Currently, the closest resistance levels for gold are $2590, $2620, and $2645 per ounce, respectively. Also, taking into account that the current and upcoming gains are strong enough to push all technical indicators towards strong and sharp oversold levels.
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