The announcement of an interest rate cut by the Federal Reserve (Fed) by 50 basis points has influenced the movement of gold prices which have shown signs of strengthening while the US dollar currency is weakening at the end of the week.
A cut of 50 basis points is considered an aggressive easing measure given that investors' expectations were only as much as 25 basis points initially based on the assessment of employment data and economic growth of the United States (US) in the second quarter.
On the XAU/USD chart which measures the value of gold against the US dollar, on Thursday the price made an increase to a high of 2594.00, failing to touch the 2600.00 level before falling back to around 2570.00.
However, continued trading today (Friday) saw the rise successfully continue to break through 2600.00 for gold to once again break its latest record high.
For the price to continue the momentum, investors expect the 2670.00 to 2700.00 zone as a price target to be reached.
If the price breaks back below 2600.00, it is likely to be an early warning for a bearish pattern in gold prices to begin.
If the move lower continues, the price will head back to around 2550.00 which is the level that the price hit during the reaction after the fomc meeting.
For the bearish trend to continue, the price focus levels in the previous weeks will be targets such as 2530.00, 2500.00 and 2470.00.
