GOLD Price Analysis – Sep 26, 2024
Daily Price Outlook
Gold (XAU/USD) continued its upward momentum, trading firmly around the $2,675 level and reaching an intra-day high of $2,675. This rally was fueled by several factors, including declining global interest rates, rising tensions in the Middle East, and a weakening US Dollar.
However, the speculation has increased regarding the US Federal Reserve's potential continuation of an aggressive monetary easing strategy.
Moreover, recent interest rate cuts by central banks, such as the People's Bank of China, Sweden's Riksbank, and the Czech National Bank, have enhanced gold's attractiveness.
Lower interest rates decrease the opportunity cost of holding gold—a non-yielding asset—making it more appealing to investors.
Fed Chair Jerome Powell's speech on Thursday is expected to attract significant attention from traders looking for hints about future rate cuts and their impact on XAU/USD.
At the same time, important US economic data, including the final Q2 GDP numbers, Weekly Initial Jobless Claims, and Durable Goods Orders, will provide more context about the economy.
Fed Rate Cut Expectations and Weak Dollar Propel Gold Higher
On the US front, the broad-based US Dollar has been losing momentum as markets increasingly expect another 50 basis point (0.50%) interest rate cut from the Federal Reserve in November.
Despite stronger-than-expected New Home Sales data for August and solid Mortgage Applications, there's little evidence the US economy is heading for a hard landing.
However, the Labor market data, like Thursday's Jobless Claims report, could play a crucial role in shaping market expectations, influencing both the US Dollar and Gold prices.
Currently, market-based odds for a 50 bps rate cut remain above 60%, according to the CME FedWatch tool, adding further pressure on the Dollar and boosting Gold, which is primarily traded in USD.
Another factor impacting sentiment is the sharp drop in consumer confidence. On Tuesday, the Conference Board's Consumer Confidence Index fell to 98.7 in September, well below expectations and August's upwardly revised 105.6.
Concerns about the labor market were a key driver of this decline. Traders are now looking ahead to Fed Chairman Jerome Powell's speech on Thursday for more clues about future Fed policy, which could have a big impact on Gold prices.
This news has boosted Gold prices as expectations of a 50 basis point rate cut and a weaker US Dollar increase Gold's appeal as a safe-haven asset. Dovish Fed comments and falling consumer confidence further support Gold's upward momentum.
Geopolitical Tensions and Global Rate Cuts Drive Gold Near Record High
On the geopolitical front, the escalating conflict between Israel and Hezbollah is pushing investors towards safe-haven assets like gold.
On Wednesday, Israeli Defense Forces chief Herzi Halevi told troops in northern Israel to prepare for a possible ground invasion of Lebanon, following continued missile exchanges.
If this invasion happens, it could increase global risk concerns, driving more demand for gold.
At the same time, gold is trading just below its record high of $2,670 per ounce, supported by recent interest rate cuts from central banks like the People’s Bank of China, Sweden's Riksbank, and the Czech National Bank.
Lower interest rates reduce the cost of holding gold, which doesn’t earn interest, making it more appealing to investors. These combined factors of geopolitical tension and lower rates are giving gold a strong boost in the market.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) continues its steady climb, trading near $2,662.67, up 0.18% for the day. The precious metal is navigating just below a critical pivot point at $2,670.00, reflecting strong bullish momentum, but immediate resistance at $2,670.90 could challenge further upward movement.
Should gold break this resistance, the next target lies at $2,681.48, followed by a higher ceiling at $2,691.20.
On the downside, immediate support is anchored at $2,643.40, offering a cushion for any pullbacks. Further support can be found at $2,633.40 and $2,623.81, levels that could come into play if the metal faces selling pressure.
The 50-EMA is currently positioned at $2,650.99, acting as a strong dynamic support. As long as gold remains above this level, the bullish trend is likely to continue. The Relative Strength Index (RSI) stands at 58, signaling neutral to slightly bullish momentum.
This suggests there is room for further upside without overbought conditions limiting the price action.
Traders are advised to consider entry points above $2,655, with a target of $2,670. A prudent stop loss around $2,645 would provide protection against downside risks. Overall, the outlook remains cautiously optimistic, with strong technical backing for further gains.
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