Gold price paused following its recent strong advance up to a new all-time high reached on Monday.
Gold price (XAUUSD) extends its consolidative price move for the second day in a row on Tuesday, as bulls become cautious following the recent advance to a new all-time high reached the day before despite slightly overbought conditions on the daily chart. The downside remains cushioned in the aftermath of betting for more aggressive easing by the US Federal Reserve (Fed). Which curbs the US Dollar’s (USD) recovery from the year to date The peak touched in response to a massive rate drop last week.
The underlying background favors bullish trading and suggests further gains.
Geopolitical threats from ongoing Middle Eastern wars, as well as political uncertainty in the United States ahead of the November election and concerns about an economic slowdown, should support the safe-haven gold price. However, the underlying positive tone in global equities markets keeps the safe-haven XAUUSD in check ahead of Friday’s release of the US Personal Consumption Expenditures (PCE) Price Index.
Daily Market Movers: Gold price remains underpinned by additional Fed rate drop bets and geopolitical uncertainties.
Bets that the Federal Reserve will further decrease borrowing prices by 125 basis points in 2024, following last week’s massive 50 basis point rate cut, pushed On Monday, the non-yielding gold price reached a new record high.
According to the CME Group’s FedWatch Tool, investors are now pricing in another large rate decrease at the November policy meeting, capping the US Dollar’s small recovery from the year-to-date low.
On Monday, Minneapolis Fed President Neel Kashkari stated that the balance of risks had swung away from rising inflation and toward additional labor market weakness, necessitating a rate cut.
Furthermore, Atlanta Fed President Raphael Bostic stated that recent data suggest strongly that the United States is on a sustainable path to price stability, despite heightened labor market concerns.
According to Chicago Fed President Austan Goolsbee, labor market deterioration often occurs swiftly. Maintaining high interest rates makes little sense if you want things to stay the same.
On the statistics front, an S&P Global survey found that business activity in the Eurozone unexpectedly fell considerably in September, while business activity in the United States remained stable.
Additional details from the flash US PMI revealed that average prices charged for goods and services climbed at the quickest rate in six months, indicating that inflation will accelerate in the coming months.
This builds on the premise that rate cuts attempted to stimulate the economy occasionally result in increased prices, which could improve the commodity’s role as an inflation hedge.
Israeli airstrikes on Monday targeting what it alleged are Hezbollah weapons sites in the south Nearly 500 people were killed in eastern Lebanon.
Israeli airstrikes on Monday targeting what it alleged are Hezbollah weapons sites in the south Nearly 500 people were killed in eastern Lebanon, heightening the possibility of a larger Middle East conflict.
This, along with political uncertainty in the United States and a grim global economic outlook, suggests that the safe-haven precious metal will continue to rise.
However, a surprise rate drop by the People’s Bank of China (PBOC) on Monday, combined with a stopgap budget agreement to finance the US government until December 20, limited advances in the Gold(XAUUSD).
Traders are now waiting for the US PCE Price Index on Friday before putting directional bets.
Gold Traders may also choose to stay on the sidelines ahead of the release of the US Personal Consumption Expenditures (PCE) Price Index on Friday, given the overbought circumstances on the daily chart.
