Gold prices (XAU/USD) have been rising for three days, reaching a new high of $2,685-$2,686 on Thursday morning. This is happening because investors expect interest rate cuts by big central banks, and ongoing conflicts in the Middle East are making gold a safer option to invest in.
Meanwhile, the US Federal Reserve (Fed) is likely to cut interest rates a little. This keeps the 10-year US government bond yield above 4%, making the US Dollar (USD) stronger. A stronger USD is slowing down some gold buying, but investors are waiting for new US economic data to see what happens next.
Gold Prices Stay Strong Even with a Stronger USD
Recently, crude oil prices have fallen, which helps reduce inflation. This gives central banks more room to lower interest rates. This, in turn, is helping increase the demand for gold. The European Central Bank (ECB) is expected to announce its third interest rate cut of the year soon. In the UK, lower inflation is making it likely that the Bank of England will also cut interest rates in November.
According to the CME Group’s FedWatch Tool, there’s a 90% chance the Fed will cut rates by 25 basis points next month. This has caused US bond yields to drop to their lowest in over a week. Despite the rising USD, gold prices remain strong.
Central banks are also buying gold to diversify their reserves, as mentioned at the London Bullion Market Association’s annual conference. Tensions between Israel and Iran and overall Middle East conflict are adding to the uncertainty, pushing more investors to buy gold.
US Economic Data and Central Bank Decisions Will Affect Gold Prices
Traders are now waiting for important US economic data, such as retail sales, jobless claims, and the Philly Fed Manufacturing Index. These reports will give more clues about the health of the US economy and could influence the price of gold.
The ECB’s decision on interest rates could also affect gold prices. If they cut rates, it could push gold prices even higher, giving traders a chance to make short-term profits.
Gold’s Next Target: $2,700
Technically, gold could keep going up if it breaks above $2,700. If this happens, it may encourage more buying, continuing the recent uptrend. The charts show that the market still has room to grow, and gold isn’t overbought yet.
On the downside, the $2,662-$2,660 level is key support, followed by $2,647-$2,646. If gold falls below these levels, it could trigger selling and pull the price down to $2,630 or even $2,600.
For the latest gold price updates, head over to Daily Gold Signal. You can also check the latest Daily Gold Update for insights.
