gold prices are currently experiencing a pause after a three-day upward trend, resting just below the significant level of $2,600. As the market anticipates the start of the two-day Federal Reserve meeting, investors are approaching cautiously. The price sits just below the recent record high of $2,590, highlighting a moment of reflection from buyers.
This price stability is attributed to expectations of a substantial cut in interest rates by the Fed, with many forecasting a 50 basis points reduction. Concerns about the U.S. economic outlook and a softening labor market are weighing on the US Dollar and Treasury bond yields, keeping them at weekly lows. As a result, gold has found support, remaining just shy of $2,600 while traders price in a 67% likelihood of an outsized rate cut this month.
Further bolstering gold prices is the influx of investments into gold exchange-traded funds and a rise in over-the-counter physical demand, particularly as central banks adapt to a lower interest rate environment. The non-yielding nature of gold positions it favorably in such conditions, leading many investors to seek refuge in physical gold amid global uncertainties, including political unrest and economic concerns from China.
Market analysis indicates that optimism for gold remains strong, with some investment banks expressing confidence in its potential upside as a hedge against risks. Projections suggest a target price of $2,700 per ounce by early 2025.
Looking ahead, while a minor correction in gold prices is possible ahead of the Fed’s policy announcements, upcoming retail sales data may influence trading decisions. Currently, the market is vigilant, weighing the possibility of significant rate cuts against potential resistances in price movements. A rejection at the $2,600 level could prompt a retreat towards the previous lows, while renewed demand could push prices through the resistance. The next significant target will be the psychologically important level of $2,650.
