Gold price have slightly dropped after hitting a record high. This is mostly due to traders taking profits. However, the drop is limited because the U.S. Dollar (USD) is rebounding from its lowest point since July 2023. The bounce in USD is happening as investors wait for the important Federal Open Market Committee (FOMC) meeting. Many expect the Federal Reserve to announce a significant interest rate cut, which could push gold prices higher again.
Global Concerns Support Gold Price
Poor economic data from China is raising worries about the world’s second-biggest economy slowing down. At the same time, ongoing political risks, including the uncertainty in the U.S. ahead of November’s elections, are making gold a safe investment. Many traders are waiting for the outcome of this week’s major central bank meetings before making big moves. The Federal Reserve’s decision will be followed by meetings of the Bank of England (BoE) and the Bank of Japan (BoJ) later this week.
Market Movements Before Central Bank Meetings
Speculation about a large rate cut by the Federal Reserve has pushed the USD to its lowest level since July 2023. This has helped gold prices rise to a new high. According to the CME Group’s FedWatch Tool, there is now a 60% chance the Fed will cut interest rates by 50 basis points. Bond yields in the U.S. have also fallen, making gold more appealing as an investment.
At the same time, U.S. economic data, like the New York Empire State Manufacturing Index, came in better than expected but didn’t help the USD much. Concerns about China’s economic slowdown and geopolitical tensions, including the Israel-Hamas conflict and reports of an assassination attempt on Donald Trump, are also influencing the market, pushing gold prices up.
Traders Await the Fed Decision
Even with many positive factors for gold, traders are waiting to see the outcome of the FOMC meeting before making big bets. The Fed’s decision, which will include new economic projections, will be followed by a press conference with Fed Chair Jerome Powell. Investors will be listening carefully for clues about future interest rate cuts, which will affect the USD and gold prices.
Technical Analysis: What’s Next for Gold Prices?
Gold remains in a strong uptrend, with a clear ascending channel since June. The Relative Strength Index (RSI) shows that gold is approaching overbought territory, which could slow down buying. However, the recent breakout above the $2,525-$2,530 zone suggests there is room for more gains. Resistance is expected around $2,600, with the next barrier near $2,620-$2,625.
On the downside, any correction could find support at $2,555. If prices fall below that, the $2,530-$2,525 zone could provide a floor. A break below $2,500 could lead to more selling and push prices toward $2,470 or lower.
Conclusion
Gold prices are steady as traders take profits and wait for key central bank decisions. The Federal Reserve’s upcoming policy announcement is crucial for determining the next move for the USD and gold. After the Fed, markets will shift focus to the BoE and BoJ meetings later this week.
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