Gold Prices Soar to New Highs Amid Interest Rate Cut Expectations and Geopolitical Tensions
The price of gold (XAU/USD) continued to rise to new highs around the $2,714 price level. The surge was fueled by key expectations of the implementation of interest rate cuts by central banks around the world, boosting gold's appeal as a hedge asset as economic uncertainty mounts and global currencies continue to weaken.
The European Central Bank (ECB) also contributed to this momentum by cutting interest rates for the third time this year on Thursday yesterday, clearly showing that monetary policy easing remains a priority due to slowing economic growth. Furthermore, the ECB's actions are seen to be in line with dovish policy expectations among major economic central banks.
The Federal Reserve is expected to take a similar approach by continuing to cut interest rates but at a moderate rate. "Retail Sales" economic data from the United States yesterday saw a 0.4% increase in retail sales in September while jobless claims were lower than expected by 241,000.
It also strengthens confidence that the Fed will adopt a moderate approach to the next interest rate cut. This development has created an environment where lower interest rates reduce the attractiveness of interest-bearing assets, making gold a more attractive alternative.
However, the world's largest bond market, the U.S. Treasury Yield, jumped seven basis points to 4.09%, reflecting renewed skepticism about how quickly the Federal Reserve will act to lower interest rates.
These rising bond yields often signal concerns that inflationary pressures may linger, forcing the central bank to maintain a more hawkish policy stance.
Apart from central bank policy, geopolitical tensions are also providing additional support to gold. The ongoing conflict in the Middle East, particularly between Israel and Iran, as well as uncertainty related to the United States presidential election, has driven demand for defensive assets.
Investors seek protection in the gold market as a way to reduce the risk posed by the potential increase in geopolitical tensions and their implications for global markets.
Technical Analysis of Gold Price
From a technical point of view, the price of gold is still in a "Bullish" position. Today's gold market focus price is at $2,715.71. This price level serves as a critical level for gold's rising momentum.
If the price of gold can continue its upward trajectory beyond this price level, it has the potential to head towards the nearest resistance level at $2,735.17, which is currently within range.
However, if on the other hand, the price level of $2,684.22 will be the main support price of the gold market, the market may see a sharper decline if that level is successfully penetrated as well as the potential for "Sellers" to dominate the market.
As central bank policy and geopolitical risks continue to dominate the macroeconomic landscape, gold's appeal as a store of value remains strong.
Traders and investors are confident that the combination of dovish monetary policy and global uncertainty will continue to keep gold prices up in the near term.
