The gold price surges (XAU/USD) has jumped above $2,400, recovering from a brief dip. This rise happened during Thursday’s trading in New York. The increase is due to expectations that the Federal Reserve (Fed) might cut interest rates starting in September.
Gold Price and Fed Rate-Cut Hopes
Gold price surges has climbed as investors expect the Fed to lower interest rates soon. This hope is strong due to recent data, including lower jobless claims, which also affected the US Dollar (USD) and bond yields.
US Economic Data and Market Reactions
The US Dollar Index (DXY), which tracks the USD against six major currencies, hit a three-day high of 103.40. At the same time, 10-year US Treasury yields approached 4%. Although higher yields usually make gold less appealing, gold’s price remains strong due to anticipated Fed rate cuts.
Factors Supporting Gold Price
Several factors support gold’s rise despite higher yields. Expectations for Fed rate cuts and geopolitical tensions, especially in the Middle East, have limited gold’s drop. Concerns about the US economy coping with higher rates also boost gold’s appeal as a safe investment.
Market Speculation and Fed Policy
The CME FedWatch tool shows a high chance of a 50-basis point rate cut in September. It also predicts the Fed might reduce rates by over 100 basis points this year. This speculation is driven by weaker job data and a rising unemployment rate. Despite some weaker economic data, the service sector is growing strongly.
Geopolitical Factors Affecting Gold
Geopolitical tensions, particularly between Iran and Israel, have also helped gold. Recent events, including the killing of a Hamas leader and threats of retaliation, make gold more attractive as a safe investment amid global uncertainties.
Technical Analysis of Gold Movements
Gold price surges is trading in a channel on the daily chart. This channel shows a slight upward trend but has been mostly sideways for over three months. The 50-day Exponential Moving Average (EMA) near $2,370 still supports gold prices. The 14-day Relative Strength Index (RSI) is between 40.00 and 60.00, showing market uncertainty. A rise above $2,483.75 could lead to new highs, while support at $2,225 remains important for the longer term.
Conclusion
In summary, the gold price’s rise above $2,400 is driven by expected Fed rate cuts, economic uncertainties, and geopolitical tensions. For the latest updates on gold prices and market trends, visit Daily Gold Signal and explore the Daily Gold Update.
