Gold price prediction surged on Monday, hitting a new record high above $2,630, as traders anticipate the US Federal Reserve will reduce interest rates in the upcoming November meeting. The XAU/USD rate reached $2,627, reflecting a gain of over 0.20%. This increase comes despite a strong US dollar, signaling that factors beyond currency strength are influencing gold prices.
Improved Risk Appetite in US Markets
US equities saw a rise in risk appetite on Monday, encouraging gold traders to push the metal’s value to record levels. Notably, the falling US Treasury yields played a pivotal role in driving this surge. The 10-year Treasury note fell to 3.741%, despite Fed officials resisting calls for aggressive interest rate cuts.
Mixed US Economic Data
Economic data in the US was mixed, adding further uncertainty to market movements. According to S&P Global, manufacturing saw a decline, with the Flash PMI falling to 47.0 from 47.9 in August. This is a concerning signal for manufacturers, as a reading below 50 indicates contraction. On the other hand, the services sector remained resilient, expanding at 55.4, although slightly below last month’s figure.
Despite this mixed economic outlook, the Atlanta Fed’s GDP Now model projects a 2.9% growth rate for Q3 2024, even with a softening labor market.
Fed’s Cautious Approach
On Monday, several Fed regional presidents discussed the risks associated with a weakening labor market. While acknowledging these risks, they made it clear that drastic rate cuts are not guaranteed. Fed officials, including Minneapolis Fed President Neel Kashkari and Atlanta Fed President Raphael Bostic, emphasized a cautious, data-driven approach moving forward. They remain open to more moderate rate adjustments, such as a gradual 50 bps cut, but are not committing to any drastic measures at this stage.
Geopolitical Tensions Boosting Gold Prices
In addition to Fed policy, geopolitical tensions in the Middle East are also supporting gold’s rally. Rising conflict between Israel and Hezbollah, along with news that the US is sending additional troops to the region, has created uncertainty in the global market. This uncertainty is often a catalyst for gold price prediction as investors turn to safe-haven assets during periods of geopolitical instability.
Gold Price Outlook and Technical Analysis
The gold market appears to be in an upward trend, although a potential retracement might occur. The Relative Strength Index (RSI) has entered overbought territory, suggesting that a pullback could happen soon. A drop below the September 18 high of $2,600 may trigger this retracement, with key support levels to watch being $2,546 and $2,481.
If gold continues to rise and breaks above the all-time high of $2,634, traders may look to target $2,650 and even $2,700 in the near future.
Conclusion
Gold’s recent rally reflects a combination of factors, including expectations of Fed rate cuts and increased geopolitical tensions. While traders should watch for possible price retracements, the long-term outlook remains positive, especially if geopolitical risks continue to rise.
For the latest updates on gold market movements and expert insights, check out the Daily Gold Updates. You can also explore detailed market analysis and trading strategies on our main website.
