Geopolitical Tensions and Fed Rate Cut Expectations Push Gold Above $2,500
On Monday, spot gold rebounded after falling to an intraday low of $2,485 per ounce, closing at $2,506 per ounce. Traders focused on upcoming U.S. inflation data for August, with expectations that the Federal Reserve may cut interest rates by either 25 or 50 basis points in the near future. Despite a stronger U.S. dollar, gold prices continued to climb, bolstered by anticipation of a Fed rate cut.
FXStreet analyst Christian Borjon Valencia highlighted that gold has regained momentum but remains below a key resistance level of $2,510 per ounce. He suggests that the trend is still bullish, though gold may consolidate before moving higher. Should gold surpass its current year-to-date high of $2,531 per ounce, it could test the $2,550 level, with the possibility of reaching $2,600 per ounce if upward momentum continues.
Gold’s appeal has increased as lower interest rates reduce the opportunity cost of holding the metal, which does not yield interest. Traders are closely watching U.S. inflation figures, with the Consumer Price Index (CPI) and Producer Price Index (PPI) set to be released later this week. A significant drop in inflation could lead to more aggressive rate cuts by the Fed, further supporting gold’s rise.
Tensions in the Middle East have also contributed to the gold price rebound. Ongoing conflict, including Israeli airstrikes in Syria, has heightened geopolitical risks, which typically drives safe-haven demand for gold.
At the time of writing, spot gold is trading at $2,506 per ounce.
