- As trading began this week, gold traded around and above the psychological resistance of $2,500 per ounce, hovering near its all-time highs, driven by strong demand for safe-haven assets as financial markets assessed the Federal Reserve's monetary policy expectations.
- Additionally, geopolitical tensions in the Middle East have contributed to the uncertainty, further supporting the demand for gold as investors seek stability.
In addition, concerns were noted about escalation between Ukraine and Russia as Ukrainian forces advanced into Russian territory. Meanwhile, positive US economic data last week led markets to favor a 25-basis point rate cut by the Federal Reserve in September, rather than a 50-basis point cut.
However, with US inflation approaching the Fed’s target, financial markets continued to expect a total of 100 basis point cuts during the remaining three meetings this year. Now, investors await Fed Chair Powell’s speech and the latest FOMC minutes later this week for more insights on monetary policy.
As for the factors affecting the gold price market, the US dollar price continues to lose ground on the dovish Fed outlook. According to trading, the US dollar index fell towards 102 on Monday, recording its weakest level in nearly eight months, weighed by expectations that the Fed will have to cut borrowing costs soon to avoid an economic slowdown.
On Friday, Chicago Fed President Austan Goolsbee said the US labor market and some leading economic indicators were flashing warning signs, pointing to rising credit card delinquency rates. Weaker-than-expected US housing starts data for July also added to the bearish sentiment. Generally, financial markets see a 100% chance that the Fed will cut interest rates by 25 basis points in September, with a larger 50-basis-point cut still on the table. Currently, investors are looking to Fed Chairman Jerome Powell's speech at Jackson Hole, Wyoming, and the latest FOMC minutes later this week for more guidance on the path of monetary policy.
In stock trading, U.S. stocks maintained their upward momentum on Monday, building on gains from their best week in a year, adding more than $3 trillion in value from this month’s lows. The S&P 500 and Nasdaq rose 1% and 1.2%, respectively, extending their winning streak to eight days in a row, while the Dow Jones added 236 points.
Optimism among investors was high as they expected a potential cut in US interest rates by the Federal Reserve, with the focus on a keynote speech by Fed Chairman Jerome Powell at the upcoming Jackson Hole symposium. Overall, all sectors closed in the green, with technology and communication services stocks leading the gains. Among individual stocks, AMD shares rose 4.5% after announcing its acquisition of ZT Systems, an artificial intelligence infrastructure provider. Palo Alto Networks shares rose 2.8% ahead of its earnings report due after the closing bell. On the downside, HP Inc. shares fell 3.7% after Morgan Stanley downgraded the stock from "overweight" to "equal weight."
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Gold Price Forecast and Analysis Today:
Although the recent gains in the price of gold have been sufficient to push all technical indicators towards strong overbought levels, the continuation of its gains will not prevent further upward progress. Technically, the closest resistance levels for gold are currently $2,515 and $2,530 per ounce. Factors supporting gold gains include increasing global geopolitical tensions, the start of easing by global central banks and increased gold purchases by banks, and the weakness of the US dollar.
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