- At the beginning of this week, the price of gold settled around $2634 per ounce, a new historical record high.
- According to gold trading platforms, the yellow metal remains at record highs after surpassing the $2600 per ounce level last week, as expectations of further US interest rate cuts and rising geopolitical tensions have boosted the appeal of bullion.
- On Wednesday last week, the Federal Reserve announced the first US interest rate cut in four years, cutting the rate by 50 basis points and expecting the benchmark interest rate to fall by an additional half a percentage point by the end of the year.
Now, financial markets are looking forward to a set of economic data this week, including US personal consumption expenditures, personal income and spending reports, and speeches from several Federal Reserve officials for further guidance on US interest rate expectations.
Regarding factors affecting the gold market, the US dollar has risen slightly after the Purchasing Managers' Indices. According to licensed trading platforms, the US Dollar Index (DXY) rose slightly to 101 on Monday after S&P Global's Purchasing Managers' Indices continued to signal strong, albeit slower, growth in the US private sector. The expansion was led by services, while contraction in manufacturing deepened. As a result, the likelihood of another 50-basis point cut in the federal funds rate in November has slightly decreased to around 46% from 47% before the release.
Meanwhile, traders are awaiting the personal consumption expenditures report due this week, and speeches from several Federal Reserve officials to gauge the central bank’s next move. Atlanta Fed President Bosick said, “The progress on inflation and the cooling of the Labor market have come much more quickly than I had envisioned at the beginning of the summer. At this point, I envision monetary policy normalizing sooner than I thought was appropriate even a few months ago.” Minneapolis Fed President Kashkari said he expected, overall, smaller steps unless the data changes significantly.
Another factor affecting gold, the yield on 10-year US Treasury bonds rose after the Purchasing Managers' Indices. The yield on 10-year US Treasury bonds extended to near 3.78%, the highest since the beginning of September, after S&P Global's Purchasing Managers’ Indices continued to signal strong, albeit slower, growth in the US private sector. The expansion was led by the services sector, while contraction in the manufacturing sector deepened.
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According to stock trading platforms, US stock futures rose on Monday after the Dow Jones and S&P 500 indices hit new record highs last week following the Federal Reserve's interest rate cut. Last week, the Dow Jones rose 1.62%, the S&P 500 rose 1.36%, and the Nasdaq Composite jumped 1.49%. Obviously, these moves came after the Federal Reserve cut the US interest rate by 50 basis points for its first cut in four years.
Negatively, the markets reacted after the initial announcement before rising in the following session. Fed policymakers expressed different views on inflation, with Governor Christopher Waller supporting a half-point rate cut due to favourable inflation data. Meanwhile, Governor Michelle Bowman, the lone dissenter, warned that this could signal a premature victory over inflation.
Gold Price Analysis and Forecast Today:
According to gold analysts, the gold index trend remains bullish, and moving around and above the psychological resistance of $2600 per ounce confirms the strength of the bulls' control over the trend. Concurrently, the technical indicators are moving towards strong overbought levels at the same time. Continued global geopolitical tensions and US dollar weakness will strengthen gold's upward trajectory. Technically, the nearest resistance levels are currently $2645, $2660, and $2685 per ounce, respectively.
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