Expectations that the Federal Reserve (Fed) will cut interest rates at next week's meeting have had a significant impact on the US dollar which continues to weaken and has given the gold market an edge by hitting new highs.
Despite strengthening when the consumer price index (CPI) of the United States (US) was published, eventually the US dollar began to weaken so much that the producer price index (PPI) which recorded a positive figure yesterday was unable to strengthen the currency.
Investors are now focusing on the Fed's expectation to cut interest rates by 25 or 50 basis points.
On the XAU/USD chart which measures the value of gold against the US dollar, on Thursday the price was seen to have made a decline at the opening of the New York session to around 2513.00 before showing a strong surge to break through the resistance of 2530.00 thus breaking the latest record high.
The upward momentum in the price of gold continued today (Friday) reaching a height of around 2570.00 in trading around the beginning of the European session.
For higher gains if it continues, it is quite difficult for investors to anticipate the next target level as the recent price is at the highest level in history.
Analysts put expectations around 2580.00 to 2600.00 as a target for this near-term increase.
On the other hand, if the price returns to decrease again, it is likely that the 2530.00 zone will be approached again with the expectation of an attractive price reaction to occur around that area.
A further drop in price if it continues can be seen to reach around 2500.00 as tested in trading last Wednesday.
