Gold price advances to fresh record high amid bearish USD, Middle East tensions
|- Gold price attracts fresh buyers on Tuesday and advances to a fresh all-time peak.
- Fed rate cut bets drag the USD to a multi-month low and benefit the XAU/USD.
- Geopolitical risks lend additional support as traders await more Fed rate-cut cues.
Gold price (XAU/USD) breaks out of its consolidative price move and jumps to a fresh record high, around the $2,522-$2,523 area during the first half of the European session on Tuesday. The US Dollar (USD) selling bias remains unabated for the third straight day amid growing acceptance that the Federal Reserve (Fed) will begin its rate-cutting cycle in September. This, in turn, is seen as a key factor driving flows towards the non-yielding yellow metal.
Furthermore, investors remain concerned about the risk of a further escalation of geopolitical tensions in the Middle East and the protracted Russia-Ukraine war. This is seen as another factor acting as a tailwind for the safe-haven Gold price. That said, the upbeat market mood might keep a lid on the XAU/USD. Bulls might also prefer to wait for more cues about the Fed's policy path before positioning for an extension of the recent well-established uptrend.
Daily Digest Market Movers: Gold price benefits from dovish Fed-inspired USD selling bias
- Gold price touches a fresh record high on Tuesday amid bets for an imminent start of the Federal Reserve's policy easing cycle in September, which drags the US Dollar to its lowest level since January.
- Meanwhile, the CME Group’s FedWatch Tool indicates a greater chance that the Fed will cut interest rates at the September meeting and further lower borrowing costs by over 200 basis points by the end of 2025.
- Minneapolis Fed President Neel Kashkari said on Monday that a debate about potentially cutting the policy rate in September is an appropriate one to have as the balance of risk has shifted more towards the labor market.
- Chicago Fed President Austan Goolsbee said the US economy is not showing signs of overheating, so central bank officials should be wary of keeping restrictive monetary policy in place longer than necessary.
- Moreover, San Francisco Fed President Mary Daly downplayed concerns about a sharp US economic slowdown, though said that the US central bank needs to take a gradual approach towards lower borrowing costs.
- Market participants scaled back their bets for a more aggressive policy easing by the Fed after the upbeat Retail Sales report for July released last week eased worries about a possible recession in the world's largest economy.
- Hence, the July FOMC meeting minutes, scheduled to be released on Wednesday, and Fed Chair Jerome Powell's appearance on Friday will be looked upon for hints about the possibility of a larger rate cut in September.
- On the geopolitical front, US Secretary of State Antony Blinken said that Israeli Prime Minister Benjamin Netanyahu had accepted a proposal to tackle disagreements blocking the hostage release deal with Hamas.
- Negotiations are expected to resume this week, fueling optimism that a ceasefire will reduce tensions in the Middle East and the possibility of a region-wide conflict, further boosting investors' appetite for riskier assets.
Technical Analysis: Gold price seems poised to climb further, bulls not ready to give up yet
From a technical perspective, an intraday strength beyond the $2,510 level could be seen as a fresh trigger for bullish traders. Moreover, oscillators on the daily chart are holding in positive territory and are still away from being in the overbought zone, suggesting that the path of least resistance for the Gold price remains to the upside.
Meanwhile, the $2,500 psychologicla mark now seems to protect the immediate downside ahead of the $2,472-2,470 horizontal resistance breakpoint. Any further decline is likely to attract fresh buyers and remain limited near the $2,448-2,446 region. The latter should act as a key pivotal point, which if broken decisively should pave the way for deeper losses. The Gold price might then accelerate the corrective decline further below the $2,400 mark, towards the 50-day Simple Moving Average (SMA) support near the $2,392 area.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.06% | -0.07% | -0.04% | -0.14% | 0.04% | -0.67% | -0.28% | |
| EUR | -0.06% | -0.11% | -0.10% | -0.17% | 0.02% | -0.41% | -0.34% | |
| GBP | 0.07% | 0.11% | 0.02% | -0.05% | 0.15% | -0.30% | -0.22% | |
| JPY | 0.04% | 0.10% | -0.02% | -0.09% | 0.08% | -0.34% | -0.27% | |
| CAD | 0.14% | 0.17% | 0.05% | 0.09% | 0.17% | -0.23% | -0.17% | |
| AUD | -0.04% | -0.02% | -0.15% | -0.08% | -0.17% | -0.42% | -0.36% | |
| NZD | 0.67% | 0.41% | 0.30% | 0.34% | 0.23% | 0.42% | 0.06% | |
| CHF | 0.28% | 0.34% | 0.22% | 0.27% | 0.17% | 0.36% | -0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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