Gold Price Forecast: XAU/USD Steadies Above $2,500 as US Dollar Weakens, Fed Rate Cut Speculation Grows
Gold, XAU/USD – Daily Chart Signals in the Back ground. On Monday, a Doji candle on daily chart signals indecision among investors and led us to wonder if recent exhaustion could become more apparent. Post-FOMC in our most recent gold price analysis after Federal Reserve Chair Jerome Powell signposted potential adjustment of monetary policy tools this year (RBA’s Lowe said nothing about liftoff), we had repeated that “intra-day pullbacks exist but at long term perspective.
Powerful bullish shocks from incoming inflation figures can’t be accompanied by bearish continuation. Gold prices remain stable as a weaker USD and that Fed interest rate cut… Gold and Silver have started the week on a steady note as traders brace for any major new guides in anticipation of Federal Reserve Chair Jerome Powell speech at Friday’s Jackson Hole symposium.
Gold hit a six-year high early on Monday without any news from the fed, but gold held its ground and went even higher as weaker USDs gave concerns that spurred speculation that the Fed might ease monetary policy which make investing other currencies into gold more attractive. Further Boosting Gold Prices, The CME FedWatch Tool Has A 67.5% Probability Of A September Rate Cut, Perhaps By 25 bps. It is underpinned by demand which feeds through to financial investment, with stronger sentiment and buying in ETFs playing a part here. Indeed, expectations of a Fed easing cycle kicking off in September but lasting through 2020 are not bending to the data pressure — and Citi Research’s Aakash Doshi says that is what driving demand.
Powell is expected to speak any minute and traders are keeping a close eye for cues on future rate cuts. Gold prices could also rise if Fed policymakers make more dovish comments. More, the ongoing geopolitical tensions in The Middle East are expected to push demand into gold as a safe-haven asset.
Yet there are countervailing forces at play. Gold price gains could be capped as China economy growth slows, curbing physical demand for the metal. China’s gold imports fell by 24% in July to a two-year low of just under 44.6 tons Lower consumption in the recession-hit Chinese economy is however hardly a surprise when it comes to gold demand as China remains one of world’s largest producers and consumers of gold.
