Fed Political Uncertainty Dampens Gold's Rise Despite Remaining Strong Fundamentals
Global gold prices have stabilized after briefly hitting a record high of US$3,674 per ounce this week. This increase is supported by a combination of strong fundamental factors, ranging from the prospect of a Federal Reserve (The Fed) interest rate cut, a weakening US dollar, to strong investment demand and gold accumulation by global central banks.
A report from the ANZ Group indicates that the gold price is projected to reach US$3,800 per ounce by the end of 2025, with the potential to even reach US$4,000 by mid-2026. The main driver comes from increasing investment fund flows, particularly into gold-based instruments. Recent data shows that the world's largest gold ETF, SPDR Gold Shares, recorded inflows of US$5.5 billion in August.
Furthermore, central banks—particularly China—continue to add to gold reserves, strengthening the long-term demand trend. Simultaneously, expectations of an interest rate cut by the Fed following weak US employment data further strengthen gold's appeal as a hedge.
Global uncertainty, both geopolitically and politically, particularly the recent Israeli attack on Hamas leaders in Qatar, as well as the economic slowdown, has also strengthened investor interest in gold as a safe haven.
Despite gold's strong fundamentals, the price rally was temporarily halted after a court suspended the dismissal of Federal Reserve Governor Lisa Cook. This suspension created new uncertainty regarding the direction of US central bank policy, as Cook is known as a dovish figure who supports monetary easing. This situation has led some market participants to adopt a wait-and-see approach, thus curbing gold's short-term gains.
Price-wise, the US$3,600 per ounce level remains key psychological support, while the nearest resistance lies in the US$3,650–3,670 per ounce area. If the price breaks above this resistance, the bullish trend could potentially continue towards the medium-term projection of US$3,800 per ounce. However, if it fails, consolidation or even a mild correction could occur to the US$3,600–3,586 per ounce range.
Overall, gold's fundamentals remain very strong, supported by the prospect of low interest rates, a weakening dollar, and solid investment demand. However, short-term technical signals warn of potential consolidation after the sharp rally in recent weeks. Political factors, such as the Lisa Cook case, are also additional factors dampening market euphoria.
Source: Newsmaker.id
