XAUUSD Forecast: Gold price hits New all-time peak, eyeing $2,600 mark due to bearish US Dollar

• Gold price trades with a mild positive bias near the all-time peak touched on Friday.
• Rising bets for a 50 bps Fed rate cut later this month continue to act as a tailwind.
• Bulls now await this week’s key central bank event risks before placing fresh bets.

The price of gold (XAU/USD) rises for the third consecutive day, marking the first positive movement in the last six days, reaching a new all-time high at the $2,589 level during the Asian session on Monday. Traders are factoring in the potential for a substantial interest rate reduction by the Federal Reserve (Fed) in light of additional indications of diminishing inflationary pressures in the US. This maintains the US Dollar (USD) at a depressed level near the year-to-date low reached in August, serving as a significant element that benefits the non-yielding yellow metal.

In addition, the political instability in the US preceding the November election and ongoing geopolitical uncertainties bolster demand for the safe-haven asset, Gold. A predominantly optimistic sentiment in the global equities markets serves as a hindrance for the precious metal. Traders appear hesitant and choose to remain inactive in anticipation of this week’s significant central bank events—the pivotal Federal Open Market Committee (FOMC) decision on Wednesday, succeeded by the policy meetings of the Bank of England (BoE) and the Bank of Japan (BoJ) on Thursday and Friday, respectively.

Daily Digest Market Movers: Gold price remains well supported by dovish Fed-inspired USD selling bias

• Traders increased expectations for a substantial interest rate reduction by the Federal Reserve due to indications of declining inflation in the US, which continues to support the non-yielding yellow metal.
• The CME Group’s FedWatch Tool reveals that current market pricing suggests a probability exceeding 50% that the US central bank will reduce borrowing prices by 50 basis points later this week.
• The expectations were bolstered by the recent US Consumer Price Index (CPI) and Producer Price Index (PPI) releases, which indicated a reduction in inflationary pressures.
  The yield on the benchmark 10-year US government bond is near its lowest level since May 2023, while the US Dollar continues close to the year-to-date low reached last month.
• Reports of a second assassination attempt on Republican presidential nominee Donald Trump at his Florida golf club on Sunday further bolster demand for safe-haven bullion.
  The prolonged Russia-Ukraine conflict, coupled with increasing volatility and the potential for heightened hostilities in the Middle East, serves as a further factor bolstering the XAU/USD.

Bullish traders appear hesitant to make new investments, opting to await the results of the forthcoming FOMC monetary policy meeting on Wednesday before proceeding.
Investors this week will closely monitor the policy meetings of the Bank of England and the Bank of Japan, which may introduce market volatility and maybe stimulate demand for the metal.