The gold price forecast (XAU/USD) maintains a positive stance, trading near $2,515 per ounce during the early Asian session on Monday. This rise is supported by the weakening US Dollar (USD) and dovish signals from the Federal Reserve (Fed). Investors are now anticipating a potential rate cut in September, further driving the value of gold upward.
Impact of Fed Chair Powell’s Speech
Fed Chair Jerome Powell’s recent speech at the Kansas City Fed’s annual symposium in Jackson Hole has provided significant support for gold prices. Powell emphasized that the time has come for the Federal Reserve to begin lowering interest rates, citing recent softness in the labor market. His comments have led to a broad decline in the USD, making gold more appealing to investors.
Market Expectations for Rate Cuts
According to the CME FedWatch Tool, financial markets have already factored in a 25 basis points (bps) rate cut, with the likelihood of a more significant reduction increasing to 36.5% from 24% last week. This growing expectation of monetary policy easing by the Fed adds further strength to gold price forecast, as it becomes more attractive for holders of other currencies.
Geopolitical Tensions and Gold Demand
In addition to economic factors, geopolitical tensions in the Middle East are also contributing to the rise in gold prices. On Sunday, Hezbollah launched a series of rocket and drone attacks on Israel, prompting pre-emptive strikes by Israel’s military in southern Lebanon. These ongoing tensions have heightened demand for gold as a safe-haven asset, further supporting its price.
Conclusion
The combination of the Fed’s dovish stance and geopolitical tensions is creating a favorable environment for gold prices. As expectations for a September rate cut grow, and with the continued uncertainty in the Middle East, the upward momentum for XAU/USD is likely to persist.
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