September 25, 2024
New Delhi, India
Gold Prices
Gold price (XAU/USD) pulled back on Wednesday after hitting a fresh record high during the Asian session as traders opted to take profits amid slightly overbought conditions on the daily chart. The broader risk-on mood, bolstered by China’s latest stimulus measures, also diverted flows from the safe-haven asset.
Despite the pullback, any significant decline in the price seems limited due to mounting expectations of aggressive policy easing by the Federal Reserve (Fed). This has kept the US Dollar bulls on the defensive near year-to-date lows, providing a tailwind for gold.
Geopolitical Risks and US Political Uncertainty Offer Support
Adding to the bullish sentiment, geopolitical tensions in the Middle East and growing uncertainty surrounding the upcoming US presidential election have kept demand for the precious metal intact. Traders are also awaiting more cues on the Fed’s rate-cut trajectory, particularly from Fed Chair Jerome Powell’s speech on Thursday, and the release of the US Personal Consumption Expenditure (PCE) Price Index on Friday.
US Dollar Weakens Amid Weaker Economic Data
Weaker-than-expected US macroeconomic data earlier this week also pressured the US Dollar. The Richmond Fed’s survey showed a further decline in manufacturing activity, and the Consumer Confidence Index dropped to its lowest since August 2021. These factors lifted gold to new highs.
Also Read: USDINR Analysis Today: Rupee Gains Amid Softer USD and Improved Risk Sentiment
Fed Rate Cut Expectations Remain High
According to the CME Group’s FedWatch Tool, markets are pricing in a 75% chance of a 50 basis point rate cut by the Federal Reserve in November, supporting gold’s bullish outlook.
Middle East Conflict Fuels Safe-Haven Demand
Geopolitical concerns, including Israeli airstrikes in Lebanon that heightened the risk of a broader conflict, continue to underpin the demand for XAU/USD as a safe-haven asset.
While China’s stimulus measures have sparked optimism in riskier assets, they have done little to dent the strong bullish sentiment surrounding gold. All eyes remain on the upcoming Fed speeches and the US PCE data for further directional cues.
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