Gold Surges Following Dovish Fed Remarks

Fundamental Analysis

*Dovish Fed: Gold prices have surged, breaking above the $2,500 mark, following dovish signals from the Fed hinting at an interest rate cut beginning in September and a softer dollar. At the Kansas City Fed’s annual symposium in Jackson Hole on Friday, Fed Chair Jerome Powell stated that “the time has come” to begin lowering interest rates, highlighting recent labor market weaknesses. Powell also stressed that the Fed does not “seek or welcome further cooling in labor market conditions.” Financial markets have now fully priced in a 25 basis point rate cut, with the likelihood of a deeper cut increasing to 36.5%, up from 24% last week, according to the CME FedWatch Tool. The growing anticipation of Fed monetary easing could further enhance gold’s attractiveness for foreign currency holders.

Technical Analysis

* Technical Breakout: Gold price was traded higher while currently testing the resistance level 2517.00. MACD which illustrate bullish momentum signal suggest the commodity  to extend its gains after it breaks above the level.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards 2550.00 after it breach above the level. Conversely, a potential reversal is also to be expected and the price could head back towards 2482.00.

Potential Risks

Looking ahead, investors will focus on key U.S. data this week, including the CB Consumer Confidence report, GDP figures, and the Core PCE Price Index. Additionally, the market will keep a close eye on developments in the Middle East, as ongoing political tensions are expected to sustain demand for safe-haven assets.

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Monitoring

Stay updated on US data, Middle East developments, central bank updates and any shifts in the US Dollar’s strength by following PU Xtrader’s financial news page.

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