- Gold soars to an all-time high of $2,586 as expectations for a substantial Federal Reserve rate cut increase, with a 43% chance of a 50 bps reduction.
- US Treasury yields decline, and the US Dollar Index falls to 101.09, further driving gold’s rally.
- Global ETFs see robust inflows; improved US Consumer Sentiment and lower inflation expectations fuel speculation about additional Fed easing.
Gold prices have surged to a new all-time high of $2,586 and are poised to continue rising as the US Dollar weakens. Expectations for a larger Federal Reserve rate cut have bolstered the non-yielding metal, with speculation that it could potentially reach $3,000. The XAU/USD is currently trading at $2,582, marking nearly a 1% gain.
Data from the CME FedWatch Tool shows that traders have raised the probability of a 50-basis-point rate cut by the Fed from 27% to 43%. This shift was influenced by a report from Fed watcher Nick Timiraous at The Wall Street Journal and comments from former New York Fed President William Dudley. Conversely, the likelihood of a 25 bps cut decreased from 73% to 57%.
As a result, US Treasury yields have fallen, weighing on the Greenback. The US Dollar Index (DXY), which tracks the Dollar against six other currencies, fell by 0.15% to 101.09.
Gold prices are expected to maintain their upward trajectory as global Gold ETFs experienced their fourth consecutive month of inflows in August, according to the World Gold Council.
Additionally, the US economic data released on Friday showed an improved Consumer Sentiment Index for September from the University of Michigan, alongside lower inflation expectations, which has further fueled speculation about additional Fed rate cuts.
Daily Digest: Market Moves – Gold Price Soars Above $2,550
- The University of Michigan Consumer Sentiment Index increased from 67.9 to 69.0, surpassing the expected 68.
- Short-term inflation expectations improved from 2.8% to 2.7%, while long-term expectations rose from 3% to 3.1%.
- The US Dollar remained under pressure following mixed August PPI data from the US Bureau of Labor Statistics. Additionally, the number of Americans filing for unemployment benefits rose as anticipated, exceeding the previous week’s figures.
- According to data from the Chicago Board of Trade, the Fed is projected to cut rates by at least 98 basis points this year, down from a previous estimate of 108 basis points, based on December 2024 fed funds rate futures contracts.
Technical Outlook: Gold Price Soars as Buyers Target $2,600
Gold's uptrend remains strong, supported by robust demand and momentum. The Relative Strength Index (RSI) remains bullish and has not yet approached the 80 level, which is typically considered the "most extreme" overbought condition.
Given the current trend, the path of least resistance for XAU/USD is upward. The initial resistance level to watch is the September 13 peak at $2,586. If this level is surpassed, the next target is the $2,600 mark.
On the downside, Gold sellers would need to push prices below $2,550 to regain control. Key support levels to monitor include the August 20 high at $2,531, with further support at $2,500.
