Gold Near Highs
Gold prices are on watch this week as traders look ahead to the all-important September FOMC meeting on Wednesday. Recent labour market weakness has fuelled a heavy dovish shift in market expectations with traders now looking for three cuts this year, beginning on Wednesday. Last week’s inflation data failed to derail this view, while confirming a fresh uptick in inflation last month.
Fed Expectations
As such, traders will now be looking for the Fed to endorse this dovishness with a cut on Wednesday and a clear signal that further easing is coming. If Powell delivers on this expectation, USD should move lower allowing room for gold to continue higher near-term. However, if the Fed is seen taking a more neutral tone, perhaps focusing on lingering inflation risks, this will likely dilute easing expectations over the remainder of the year and could see gold correcting lower as USD squeezes higher.
Safe-Haven Demand
Alongside the Fed and USD rate expectations, gold prices are also being underpinned by continued safe-haven support linked to elevated global geopolitical tensions. Ongoing conflict between Russia and Ukraine as well as recent events where Russia threatened ANTO airspace in Poland mean that safe-haven demand for gold remains strong. Additionally, Israel’s continued war against Gaza and recent attacks against Hamas in Qatar are also adding to a sense of global unease. While this backdrop remains, gold prices look likely to continue higher while safe-haven demand remains firm.
Technical Views
Gold
For now, gold prices remain hemmed in by the 1:1 Fib extension level at 3,652.34. Momentum studies are cooling here reflecting the pause. However, while price holds above the 3,493.81 level, focus is on a fresh push higher with the 3,800 level the next bull objective.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.