Gold Rally: Profit-Taking Risks Loom Over XAU/USD Gains

Saturday, 28 September 2024, 01:33

Gold prices have surged due to the U.S. Federal Reserve's dovish policies, but profit-taking risks may threaten the rally's sustainability. Key economic indicators and geopolitical tensions underpin this bullish trend. Investors are closely monitoring inflation data and safe-haven demand in these turbulent times.
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Gold Rally: Profit-Taking Risks Loom Over XAU/USD Gains

Gold Prices Surge Amid Fed Rate Cuts and Geopolitical Tensions

Gold prices climbed last week, propelled by the U.S. Federal Reserve's dovish monetary policy, which led to heightened geopolitical tensions in the Middle East. The metal reached an all-time high of $2685.64 on Thursday before a slight pullback to close at $2658.55, marking a 1.38% gain for the week.

Fed Rate Cuts and Economic Data Drive Gold Higher

  • Rate Cuts Support Gold's Appeal: The Federal Reserve's unexpected 50 basis point rate cut reduced the benchmark rate to 4.75%-5.00%, enhancing the attractiveness of gold as a non-yielding asset.
  • Positive Economic Indicators: The Personal Consumption Expenditures (PCE) price index showed inflationary pressures slightly below expectations, further supporting potential future rate cuts.

Geopolitical Tensions Boost Safe-Haven Demand

Ongoing geopolitical tensions in the Middle East, particularly the conflict between Israel and Hezbollah, have increased investors' appetite for safe-haven assets like gold.

ETF Inflows and Central Bank Demand Support Gold's Bullish Trend

  1. Gold-backed ETFs saw inflows of 28.5 tonnes in August, indicating strong investor interest.
  2. Central banks, especially in China, continue to build gold reserves.

Gold’s Weekly Performance and Technical Outlook

With gold having reached unprecedented highs, technical indicators suggest it may be overheated, and analysts advise vigilance regarding potential corrections.

Gold Price Forecast: Continued Bullish Outlook

Looking ahead, market fundamentals suggest that gold will likely remain supported above $2600 amid ongoing Federal Reserve rate cuts and enduring geopolitical risks.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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