Gold rose to a new all-time high amid a dovish Fed inspired USD selling bias.

During the Asian session on Wednesday, the gold price (XAUUSD) held steadily above the psychological level of $2,500, being well within striking distance of the all-time high reached the day before. Growing acceptance that the Federal Reserve (Fed) will soon begin its policy easing cycle serves as a crucial tailwind for the non-yielding yellow metal.

Geopolitical pressures also helped to drive flows to the safe-haven XAUUSD.

Aside from that, geopolitical concerns and China’s Economic difficulties bolster the safe-haven asset.

However, hopes that tensions in the Middle East were subsiding, along with an underlying positive tone in global financial markets and a slight US Dollar (USD) comeback from a multi-month low, capped Gold gains. Traders also prefer to wait for further information regarding the Fed’s policy course before making new directional bets. As a result, the July FOMC meeting minutes, which are coming later today, and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium on Friday continue to dominate the headlines.

Daily Market Movers: Gold Price Awaits More Fed rate cut signals before the next move higher.

Bets for an impending start of the Federal Reserve’s rate-cutting cycle in September have placed the US Treasury bond Yields and the US dollar were under pressure, which pushed the gold price to a new record high on Tuesday.
According to the CME Group’s FedWatch Tool, markets are presently pricing in a slightly more than 70% possibility that the US central bank would reduce borrowing prices by 25 basis points at the September FOMC monetary policy meeting.
Furthermore, a Reuters survey found that a thin majority of analysts expect the Fed to lower interest rates by 25 basis points at each of the remaining three meetings in 2024, one more rate decrease than projected last month.

Bulls stop to await additional clues regarding the Fed’s rate-cutting path before putting new wagers.

Fed Governor Michelle Bowman attempted to moderate expectations of a near-term rate cut, stating that notwithstanding recent advances, price rise levels remain well-elevated and considerably above the central bank’s 2% target.
The People’s Bank of China (PBOC) awarded fresh gold import limits to numerous Chinese banks this week in anticipation of increased demand, implying that another Chinese gold buying spree may be on the way.
Furthermore, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, saw its holdings rise to their highest level in seven months on Monday, indicating increased financial investment demand.
Meanwhile, geopolitical concerns, notably in the Middle East, and a prospective ceasefire between Israel and Hamas keep investors on edge, which contributes to the safe-haven XAUUSD.
Traders have turned cautious ahead of the release of the July FOMC meeting minutes later this Wednesday and Fed Chair Jerome Powell’s speech on Friday, which will be scrutinized for hints about the future policy direction.