Gold market has entered a positive consolidation period near its all-time high set on Wednesday.
Gold price (XAUUSD) recovered bullish momentum on Thursday, rallying back closer to the all-time high reached the previous day in response to the Federal Reserve’s (Fed) decision to begin the policy easing cycle with an enormous rate decrease. Expectations of future rate cuts by the US central bank sparked further USD selling, which proved to be a crucial element in the non-yielding yellow metal’s success.
Concerns over the US-China economic outlook and geopolitical threats also help the XAUUSD.
Apart from Concerns over a slowdown in the United States (US) and China, the world’s two largest economies, as well as persistent geopolitical uncertainties, pushed up the gold price even further. However, the risk-on surge in global equities markets limits additional upside for the safe-haven XAUUSD, resulting in moderate range-bound price action throughout the Asian session on Friday.
Nonetheless, at current levels, the gold price is poised to end in the green for the second week in a row. Furthermore, the fundamental backdrop appears to be bias in favor of bullish traders, implying that the commodity’s well-established uptrend will continue. Traders are now looking to the critical Bank of Japan (BoJ) policy statement, which may inject volatility and provide some momentum to the XAUUSD.
Daily Market update: Gold price gains support from negative USD and ongoing geopolitical uncertainties.
The Federal Reserve’s hefty rate decrease on Wednesday, as well as its prediction for another 50 basis points in borrowing costs by the end of the year, failed to help the US Dollar capitalize on the post-FOMC bounce from the year-to-date lows.
Furthermore, Fed policymakers anticipated that rates will decrease to 3.4% in 2025, down from a previous forecast of 4.1%, and 2.9% in 2026, down from a previous forecast of 3.1%, reviving demand for gold on Thursday.
USD bulls appear underwhelmed by the bullish US macro statistics.
The USD bulls appear underwhelmed by the bullish US macro statistics, which reveal that Weekly Initial Jobless Claims declined to 219K in the week ending September 14, reaching the lowest since May, indicating a resilient labor market.
Furthermore, the Philadelphia Fed’s survey found that the current general activity index for manufacturing increased from a seven-month low of -7.0 in August to 1.7 in September, above consensus expectations.
Meanwhile, the Fed’s excessive rate decrease fanned fears about economic growth, which, combined with continuing concerns about a downturn in China, boosted the safe-haven XAU/USD.
Furthermore, geopolitical dangers arising from Middle Eastern tensions and the Russia-Ukraine conflict operate as a tailwind for the precious metal as the US political landscape becomes more uncertain ahead of the November presidential election.
Aside from this, some Asian central banks and Russia are purchasing gold to lower their The reliance on the US dollar benefits optimistic traders and raises the possibility of additional appreciation in the near term.
