Gold's Rise Has No Remedy Yet!
Global gold prices have risen sharply again, hitting a new record high above USD 4,300 per ounce, driven by growing speculation that the Federal Reserve (The Fed) will soon cut interest rates and a surge in demand for safe-haven assets amid global uncertainty.
In the Asian session, spot gold (XAU/USD) traded around USD 4,285 per ounce, up around 0.6% compared to the previous close. This increase extended the bullish rally that has lasted for two consecutive weeks.
Fundamentals: Fed Expectations Push Gold to Historic Highs
The sharp rise in gold prices was triggered by growing market confidence that the Fed will cut interest rates soon to stimulate an economy that has begun to weaken due to the prolonged impact of the US government shutdown and slowing industrial sector activity.
According to the CME FedWatch Tool survey, the probability of a 25 basis point interest rate cut at the FOMC meeting in late October is over 85%. These expectations have depressed US government bond yields and weakened the dollar, making gold even more attractive to investors.
"Investors are now more focused on the potential for the Fed to ease monetary policy than on short-term economic data. When interest rates fall, gold's appeal as a hedge increases sharply," said a precious metals analyst from Reuters Energy Desk.
In addition to monetary factors, the renewed escalation of trade tensions between the US and China has also strengthened demand for safe-haven assets like gold. The US government is reportedly considering new tariffs on Chinese technology products, which is feared could worsen the global growth outlook.
Support from Central Banks and Large Financial Institutions
Several large financial institutions have also added to the positive sentiment on gold prices. HSBC, in its latest report, raised its projection for the average gold price in 2025 to USD 4,100, a significant increase from its previous estimate.
Meanwhile, Bank of America (BoA) even predicted that gold prices could potentially reach USD 5,000 per ounce by 2026, in line with a weakening dollar and looser monetary policies in various countries.
"Demand from central banks and institutional investors remains solid. Gold is a top choice amidst global economic weakness and uncertainty over US fiscal policy," the BoA report stated.
Technical: Strong Bullish Trend, But Beware of Short-Term Corrections
Technically, gold's trend continues to show strong bullish momentum. Prices are now moving well above the 20-, 50-, and 200-day moving averages (MAs), indicating the continuation of the medium-term uptrend.
However, several technical indicators, such as the Relative Strength Index (RSI), are showing overbought conditions, indicating the potential for a short-term correction if profit-taking occurs.
The main support zone is in the range of USD 4,220–USD 4,270 per ounce.
Strong resistance is estimated at around USD 4,350–USD 4,390 per ounce.
As long as the price remains above USD 4,300, gold's uptrend is still considered valid and has the potential to continue strengthening to the next psychological level of USD 4,400.
Weekly Closing Forecast
With strong support from interest rate cut expectations, safe-haven demand, and a weakening dollar, analysts predict gold prices will close this week in the range of USD 4,270 – USD 4,320 per ounce.
A moderate correction remains possible, but selling pressure is expected to be limited as global sentiment remains in favor of safe assets.
"As long as the market still views US economic risks as high and the Fed remains dovish, any correction in gold is likely to be temporary," explained the FXStreet report.
The combination of Fed rate cut expectations, geopolitical tensions, and strong demand from global investors has led gold to set a new record in trading this week.
Although room for short-term corrections remains open, the underlying trend remains bullish, with the price potentially strengthening towards USD 4,400 in the coming weeks.
Source: Newsmaker.id
