Gold price extends uptrend as Fed’s Powell gives clear signal for September rate cut

• Gold price gains traction in Monday’s Asian session.
• Expectations of a Fed rate cut and ongoing geopolitical tensions continue to support gold prices.
• July US durable goods orders are due months later.

The price of gold (XAU/USD) is holding positive ground above the $2,500 psychological support from Monday. The rise in the precious metal is supported by growing expectations that the US Federal Reserve (Fed) will begin to cut borrowing costs in September. The expectation of lower interest rates is generally positive for gold, as it lowers the opportunity cost of holding the non-interest-paying asset.

Moreover, escalating geopolitical tensions in the Middle East and economic uncertainty are likely to boost asylum demand, benefiting the price of gold. On the other hand, sluggish demand from the Chinese economy could undermine the yellow metal, as China is the world’s largest producer and consumer of gold. Later on Monday, US durable goods orders for July are due. The highlights for this week will be US Annualized Gross Domestic Product (GDP) for the second quarter and the Personal Consumption Expenditure-Price Index (PCE) for July, which will be released on Thursday and Friday, respectively.

Daily Digest Market Movers: Gold price remains strong amid firmer Fed rate cut expectations

• Fed Chairman Powell told the Fed’s annual economic symposium in Kansas City in Jackson Hole on Friday: “The time has come for policy to adjust.”
• The July FOMC minutes released last week indicated that the “vast majority” of Fed officials believe a September rate cut will be appropriate as long as there are no data surprises.
• Philadelphia Fed President Patrick Harker said he supports two or three interest rate cuts in 2024, barring any substantial changes in U.S. economic data.
• Chicago Fed President Austan Goolsbee said monetary policy is currently at its most restrictive level and the Fed’s focus is now on meeting its employment mandate.
• Hezbollah launched hundreds of rockets and drones into Israel early Sunday, as Israel’s military said it carried out a wave of pre-emptive strikes in southern Lebanon to counter a large-scale rocket and drone attack by Hezbollah, according to Reuters.

Technical Analysis: Gold price continues its bullish long-term momentum

The price of gold is trading in positive territory on the day. The precious metal was trading in a five-month-old uptrend channel. However, the overall bullish environment for the yellow metal remains intact as it holds above the 100-day exponential moving average (EMA) on the daily chart. Additionally, the 14-day Relative Strength Index (RSI) is in the bullish zone near 62.70, suggesting the trend is still in favor of the bulls.

If Gold prints a few more bullish candlesticks, we could see a rise to the $2,530-$2,535 region, the record high and the upper limit of the trend channel. A decisive break above this level may attract more buyers who could support a rise to the psychological barrier of $2,600.

On the other hand, the initial support level appears at $2,470, the August 22 low. If XAU/USD sees more bearish candlesticks below said level, then the yellow metal could attract enough sellers to pull it down to $2,432, the August 15 low. The crucial level of conflicts is seen in the area of ​​$2,350-$2,360, the lower limit of the trend channel and the 100-day EMA.