GOLD Price Analysis – Sep 24, 2024
Daily Price Outlook
Gold prices (XAU/USD) experienced a pullback after reaching a record high of around $2,640 on Tuesday, retreating toward the lower end of its daily range.
However, the rise in US Treasury bond yields has strengthened demand for the US Dollar, leading to profit-taking in gold amid slightly overbought conditions on the daily chart.
Despite this retreat, any significant decline in gold prices seems limited due to increasing expectations for more aggressive policy easing by the Federal Reserve (Fed).
Furthermore, ongoing geopolitical tensions, US political uncertainty, and a challenging global economic outlook are likely to sustain the safe-haven appeal of XAU/USD.
Traders are also closely monitoring Fed Governor Michelle Bowman's upcoming speech for further insights into future policy direction.
Anticipated Fed Rate Cuts and Economic Data Boost Gold Price Outlook
On the US front, there is growing belief that the Federal Reserve will lower interest rates by 125 basis points in 2024. This follows a recent 50 basis point cut that pushed gold prices to an all-time high.
According to the CME Group's FedWatch Tool, investors expect another significant cut at the November meeting. As a result, the US Dollar has struggled to recover from its lowest point this year.
Minneapolis Fed President Neel Kashkari stated that the focus has shifted from controlling high inflation to addressing potential job market weaknesses, which highlights the need for lower interest rates.
Meanwhile, Atlanta Fed President Raphael Bostic pointed out that recent data shows the US is moving toward stable prices, but there are rising concerns about the job market.
Chicago Fed President Austan Goolsbee added that job market declines can happen quickly, suggesting that keeping interest rates high may not be wise if stability is the goal.
On the economic front, a survey from S&P Global revealed that business activity in the Eurozone unexpectedly fell sharply, while US business activity remained steady in September.
Additionally, the flash US PMI report showed that prices for goods and services rose at the fastest rate in six months, indicating potential inflation risks.
Therefore, the anticipated rate cuts by the Federal Reserve are likely to support gold prices, as lower interest rates decrease the opportunity cost of holding non-yielding assets like gold. Additionally, rising inflationary pressures may further boost gold's safe-haven appeal.
Geopolitical Tensions and Economic Measures Impact Gold Prices
On the other hand, Israeli airstrikes on Monday targeting Hezbollah weapons sites in southern and eastern Lebanon resulted in nearly 500 fatalities, escalating the risk of a broader conflict in the Middle East.
This situation, combined with ongoing US political uncertainty and a gloomy global economic outlook, suggests that gold, as a safe-haven asset, is likely to experience upward pressure.
Investors typically flock to gold during times of geopolitical tension and economic instability, making it a popular choice for preserving wealth.
Moreover, the unexpected interest rate cut by the People's Bank of China (PBOC) and the passing of a temporary spending bill to fund the US government until December 20 have limited the rise in gold prices (XAU/USD).
These events show that even though there is strong demand for gold due to geopolitical tensions, supportive actions from major economies, such as China's rate cut and US fiscal measures, might prevent significant increases in gold prices in the short term.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,628.47, up 0.25%, showing a steady upward movement during the Asian session. The price remains in a short-term bullish trend, supported by a 50-day exponential moving average (EMA) at $2,601.19.
Immediate resistance is situated at $2,640.67, followed closely by the pivotal resistance level at $2,651.94. A break above these levels could propel the price to the next major resistance at $2,663.95.
On the downside, immediate support lies at $2,605.40, with further key supports at $2,593.64 and $2,581.15.
From a technical perspective, the RSI (Relative Strength Index) stands at 58, reflecting moderate bullish momentum without nearing overbought conditions. This indicates room for further gains before any potential pullback.
The key pivot point at $2,652.00 suggests that this level could be the critical threshold for bullish continuation.
Overall, a buy position above $2,623 could target the $2,652 resistance level, with a potential stop-loss at $2,607 to manage downside risk.
The price action suggests further bullish movement as long as gold remains supported by the 50 EMA and the broader sentiment around safe-haven assets remains intact amid global economic uncertainty.
Gold remains bullish above $2,623, with $2,652 as the next key target, supported by a strong technical setup and favorable market sentiment.
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