Investors Anticipate the Fed's Decision and US-China Tensions, Is Gold Ready to Skyrocket?
Global gold prices (loco gold) rose at the start of this week, driven by growing expectations that the Federal Reserve (The Fed) will cut interest rates at its meeting next month and escalating geopolitical tensions between the United States and China.
In today's trading, the spot gold price rose around 0.98% to US$4,056 per troy ounce.
Market participants are starting to increase speculation that the Fed will cut interest rates by 25 basis points at its upcoming November meeting. Recent inflation data showed a gradual slowdown, while weaker employment data last week reinforced the belief that price pressures are easing.
These rate cut expectations are putting downward pressure on the US dollar and Treasury yields, increasing gold's appeal as a non-interest-bearing asset.
"Investors are starting to return to gold as a hedge due to the uncertainty surrounding the direction of US monetary policy," said a senior commodity analyst at Bloomberg Intelligence.
In addition to monetary policy factors, the market is also focusing on escalating diplomatic tensions between the US and China. Washington is reportedly planning to tighten export controls on semiconductor technology, while Beijing is responding with possible restrictions on rare earth metal exports.
This situation has increased demand for safe-haven assets like gold amid concerns about a potential slowdown in global trade.
As long as the US dollar does not strengthen significantly and global uncertainty remains high, gold prices have the potential to remain above the US$4,030-US$4,040 area, with the possibility of testing US$4,080 if inflation data shows a further decline.
Technically, gold is currently in a medium-term uptrend. The nearest support level is at US$4,080, followed by the psychological area of US$5,000. If the price is able to break through the resistance of US$4,070-US$4,080, the potential for strengthening to US$5,000-US$5,050 is wide open. However, failure to break through this resistance could trigger a short-term technical correction towards US$4,010.
The RSI indicator remains in the neutral-bullish area, while the MACD indicator shows strengthening positive momentum.
Source: Newsmaker.id
