Gold price holds above $2,500 as Fed eyes September rate cut

• Gold remains steady above $2,500, supported by Fed minutes suggesting a possible rate cut at the next meeting.
• The US dollar index (DXY) is down 0.20% at 101.10, weakening the greenback and supporting gold prices.
• Investors are focused on upcoming US economic data and Fed Chairman Powell’s speech at the Jackson Hole Symposium on Friday.

Gold remained firm above $2,500 for a third straight day after Minutes of the US Federal Reserve (Fed) opened the door for an interest rate cut at its next meeting in September, weakening the Greenback. XAU/USD is trading at $2,511, basically unchanged.

Investors cheered the contents of the Fed’s July meeting minutes as Wall Street continued to trade in green territory. The greenback fell sharply over 0.20% as reflected by the US Dollar Index (DXY) which is around 101.10.

The minutes revealed that most Fed participants said it “probably would be appropriate to ease policy at the next meeting if data continues to come in as expected,” adding that progress on inflation and rising unemployment opened the door for a quarter or percentage point rate cut at the July meeting.

Although Fed officials voted unanimously to keep rates unchanged at the July meeting, many officials viewed the rates as restrictive. On the Fed’s dual mandate, risks have become more balanced, with most policymakers increasingly concerned about achieving the maximum employment mandate, while inflation risks have eased slightly.

Additionally, traders will be eyeing a light economic record with the release of initial jobless claims, S&P Global PMI and housing data on Thursday.

On Friday, traders will watch Fed Chairman Jerome Powell’s speech at the start of the Jackson Hole Symposium hosted by the Kansas City Fed in Wyoming.

Daily Market Reasons: Gold Price Firm After FOMC Minutes

• Gold prices rose as US Treasury yields fell. The US 10-year note fell 1.5 basis points (bps) to 3.792%.
• Following the release of the latest FOMC minutes, traders expect 102 basis points of easing, according to the December 2024 Chicago Board of Trade (CBOT) fed funds futures contract.
• Initial U.S. jobless claims data for the week ending Aug. 17 is expected to rise to 230,000 from 227,000 a week earlier.
• Business activity released by S&P Global is expected to show a slight decline in the services PMI from 55 to 54. The manufacturing PMI is expected to remain unchanged at 49.6.
• Existing home sales are expected to increase from 3.89 million to 3.93 million.

Technical Analysis: Gold Price to Test $2,550 Once Clears $2,530

Gold’s daily chart suggests the yellow metal is expected to rise further if buyers break the all-time high of $2,531. Momentum suggests that the bulls are in charge, as shown by the Relative Strength Index (RSI).

Therefore, the first resistance in XAU/USD would be the $2,550 area, followed by the $2,600 threshold. However, gold’s weakness and the unyielding metal could return below the $2,500 mark.

In this outcome, the next support would be the July 17 high at $2,483, followed by the May 20 high at $2,450. Once released, the next stop would be the 50-day simple moving average (SMA) at $2,395.