- Gold prices reach a new record high, supported by a range of factors.
- Anticipated rate cuts from major central banks and ongoing geopolitical risks boost XAU/USD.
- However, the recent rally of the USD, reaching its highest level since August, limits gains for the commodity.
Gold price (XAU/USD) continues its upward trend for the third consecutive day, reaching a fresh all-time high around the $2,685-2,686 mark during the early European session on Thursday. This rise is driven by expected interest rate cuts from major central banks and ongoing geopolitical risks related to conflicts in the Middle East, attracting flows toward the non-yielding yellow metal.
The market's expectation that the Federal Reserve (Fed) will implement modest interest rate cuts keeps the yield on the benchmark 10-year US government bond above 4%. This situation has lifted the US Dollar (USD) to its highest level since early August, which somewhat limits the ability of bulls to place new bets on gold. Traders are now looking ahead to US macroeconomic releases for potential short-term opportunities.
Daily Digest Market Movers: Gold Price Holds Steady Near Record High Despite Strong USD
- The recent drop in crude oil prices is anticipated to ease inflationary pressures, allowing major central banks to consider further interest rate cuts, which continues to support flows into gold.
- The European Central Bank is set to deliver its third interest rate cut of the year this Thursday, while a significant decline in UK inflation has strengthened expectations for a rate cut by the Bank of England in November.
- Additionally, the CME Group's FedWatch Tool indicates over a 90% probability that the Federal Reserve will reduce borrowing costs by 25 basis points next month, pulling US bond yields down to a one-week low.
- Despite the USD's strong performance, which has seen it rise to its highest level since early August, this has not deterred XAU/USD bulls.
- Comments from officials at the London Bullion Market Association's annual conference suggest that central banks remain eager buyers of bullion, looking to diversify their reserves for financial and strategic reasons.
- On the geopolitical front, the United Nations (UN) reported that Israeli forces have targeted its peacekeeping positions, resulting in injuries to several of its troops in southern Lebanon.
- Additionally, a source indicated that Israel's response plan to Iran’s October 1 attack is ready, heightening the risk of further escalation in the region.
- China's housing minister announced plans to add 1 million urbanization projects and implement monetization measures for these initiatives.
- Later in the early North American session, traders will focus on key US economic indicators, including Retail Sales, Weekly Initial Jobless Claims, and the Philly Fed Manufacturing Index.
- The ECB's monetary policy decision may also introduce volatility in the markets, potentially providing meaningful impetus for the safe-haven precious metal.
Technical Outlook: Gold Price Likely to Extend Upward Trajectory Beyond $2,700
From a technical standpoint, the current positive momentum could drive gold prices toward the $2,700 mark. A breakthrough at this level may trigger further buying and extend the ongoing multi-month uptrend. This bullish outlook is supported by oscillators on the daily chart remaining in positive territory, still away from the overbought zone.
Conversely, the $2,662-2,660 horizontal zone appears to act as immediate support, followed by the $2,647-2,646 area. A decisive break below this level could lead to technical selling, potentially dragging Gold prices down to the $2,630 intermediate support, with a further decline towards the $2,600 region.
