GOLD Price Analysis – Sep 19, 2024
Daily Price Outlook
Gold prices (XAU/USD) experienced a significant rally, climbing to around $2,567 and reaching an intraday high of $2,568.19. This upswing followed the US Federal Reserve's decision to cut interest rates by 50 basis points, which led to a weaker dollar and boosted gold’s value.
However, the resurgence in gold prices is also attributed to growing concerns about economic slowdowns in major economies like the US and China, as well as rising tensions in the Middle East, which have driven investors towards gold as a secure investment.
Market participants are now anticipating upcoming US economic data, including Weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Existing Home Sales, which may further impact gold’s trajectory.
Impact of Federal Reserve Rate Cut on Gold Prices and US Dollar
On the US front, the broad-based US dollar lost its upward momentum after the Federal Reserve’s unexpected decision to cut interest rates by 50 basis points, instead of the anticipated 25 basis points.
The Federal Reserve reduced its benchmark interest rate by 50 basis points to a range of 4.75%–5% and also forecast a further half-point reduction by the end of the year.
According to the Fed’s updated projections, interest rates are expected to drop to 3.4% in 2025 and 2.9% in 2026, down from previous forecasts of 4.1% and 3.1%, respectively.
The Fed’s new economic outlook suggests that inflation will not reach the 2% target before 2026, raising questions about the extent of future rate cuts.
During the post-meeting press conference, Fed Chair Jerome Powell reassured that there is no immediate risk of a recession, citing cooling inflation and a strong labor market.
This reassurance led to a sharp increase in US Treasury bond yields, which continued to rise into Thursday’s Asian session, supporting the US dollar’s recovery.
Gold prices increased as the US dollar weakened due to the Fed’s larger-than-expected rate cut. However, the dollar's recovery could limit further gains in gold prices, as a stronger dollar may reduce gold's appeal.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,575.97, up 0.19%, holding steady above key technical levels, signaling potential bullish momentum.
The immediate resistance is seen at $2,589.57, with further resistance at $2,601.99 and $2,612.69. On the downside, immediate support is at $2,555.78, followed by $2,545.84 and $2,535.16.
The 50-day Exponential Moving Average (EMA) at $2,575.37 is acting as crucial near-term support, reinforcing the upward trend. The Relative Strength Index (RSI) stands at 55, indicating moderate buying interest, yet still leaving room for additional gains.
If gold breaks above $2,589.57, it may open the door for further gains towards the $2,600 mark. However, a failure to hold above $2,555.78 could trigger bearish pressure, bringing prices down towards the lower support levels.
With global economic uncertainty and a weaker US dollar following the Fed’s recent monetary easing, gold continues to benefit from its safe-haven appeal. The near-term outlook remains bullish as long as prices hold above the $2,568 level.
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