Gold News: Fed Rate Cut Expectations and Geopolitical Risks Push Gold Prices Up

Gold Prices Rise on Fed Rate Cut Expectations and Middle East Tensions

Gold prices climbed on Thursday, driven by increasing expectations that the Federal Reserve will begin cutting interest rates next month. Ongoing tensions in the Middle East further bolstered gold’s appeal as a safe-haven asset. Investors are also closely watching upcoming U.S. economic data, which could significantly impact the Fed’s decision-making and influence gold prices.

At 11:13 GMT, XAU/USD is trading $2522.98, up $18.31 or +0.73%.

Gold Gains Amid Weaker Dollar and Anticipated Fed Easing

Gold prices edged higher, benefiting from a weaker U.S. dollar and the prospect of a Federal Reserve rate cut. Despite a temporary rebound in the dollar, traders are focused on the likelihood of rate cuts, which enhances the appeal of gold, a non-yielding asset, in a low-interest-rate environment. The market is also paying close attention to a key U.S. inflation report due this week, which could further clarify the Fed’s rate outlook.

Kyle Rodda, a financial market analyst at Capital.com, noted that while gold remains strong in the long term, a short-term pullback is possible if upcoming data dampens expectations of rate cuts. The Personal Consumption Expenditures (PCE) data, the Fed’s preferred inflation gauge, is set for release on Friday and could be pivotal in shaping market sentiment.

U.S. Economic Data and Fed Commentary Support Bullish Gold Sentiment

The anticipation of U.S. initial jobless claims and GDP data, due later today, adds another layer of uncertainty. Investors are eagerly awaiting these releases to gauge the economy’s health. Despite the dollar’s temporary strength, gold’s rise reflects broader market sentiment that favors a Fed pivot to rate cuts.

Recent comments from Fed Chair Jerome Powell and other policymakers have suggested that the time may be right for easing monetary policy. Atlanta Fed President Raphael Bostic echoed this sentiment, stating that with inflation trending downward and unemployment ticking up, it might be time for the Fed to move on rate cuts.

Dollar Recovery Ignored by Traders as Gold Remains Strong

The U.S. dollar is in its second day of recovery following a steep sell-off, yet gold prices continue to hold firm. Traders are largely overlooking today’s dollar rebound, focusing instead on the broader expectation of Fed rate cuts and geopolitical risks that support gold. While the dollar’s short-term recovery could introduce volatility, its longer-term weakness is generally seen as supportive for gold.

Market Forecast: Short-Term Volatility Possible, Long-Term Bullish Outlook

In the short term, gold prices may experience fluctuations depending on the outcome of U.S. economic data releases, particularly the PCE index. However, the broader market expects the Federal Reserve to cut rates, which should continue to support gold prices. Traders should remain cautious of potential short-term pullbacks but can maintain a generally bullish outlook on gold as rate cut expectations solidify and geopolitical tensions persist.

Technical Analysis

Gold (XAU/USD) is higher on Thursday and within striking distance of its record high at $2531.77. A trade through this level will set a new record high and could trigger an acceleration to the upside.

On the downside, the nearest support is a pivot at $2482.00, followed by a minor bottom at $2470.85. If this level fails then momentum will shift to the downside with the pivot at $2442.48 the next target. The major support is the 50-day moving average at $2417.73.