Buyer interest in Gold remains strong as speculation grows about a Fed rate cut in September.
XAUUSD 4-hour chart
Gold extends its recent gains, reaching a new peak around the $2,476-2,477 range during Wednesday’s Asian session. Recent statements from Federal Reserve officials have solidified expectations of an upcoming rate-cutting cycle starting in September. Consequently, US Treasury bond yields remain low, near multi-month lows, which supports Gold as a non-yielding asset.
Even with a slight uptick in the US Dollar, which typically dampens the appeal of USD-denominated commodities like Gold, the market’s bullish sentiment towards Gold remains robust. This is particularly noteworthy given the current global equity market uptrend, which usually signals a risk-on sentiment. Demand for the safe-haven metal remains resilient in this context, underscored by the bullish bias for XAU/USD despite slightly overbought conditions potentially tempering gains.
Federal Reserve officials’ recent statements have reinforced expectations of a September interest rate cut, prompting increased interest in the non-yielding gold price. On Monday, Fed Chair Jerome Powell commented that second-quarter inflation data indicated progress toward meeting inflation targets.
From a technical perspective, Gold is exhibiting a strong bullish momentum, aggressively creating higher highs and lows without retracement. It is currently trading above the trend line support, suggesting a potential for further upward movement. However, caution is advised at the current price point, as the risk of a potential pullback is high. It may be prudent to wait for a retracement to consider long positions, as this would provide a better risk-to-reward ratio.
