Gold Price Analysis: Targeting $2,600 Amid Likely 50bps Cut

• News outlets reported that a 50 bps Fed rate cut next week was a close call.

• Gold traders cheered the likelihood of aggressive policy easing.

• The probability of a 50 bps Fed rate cut in September rose to 45%.

Gold price analysis points to a sharp increase in bullish momentum as the yellow metal benefits from increased bets for a massive Fed rate cut. Gold hit an all-time high after reports that the US central bank may be poised to cut interest rates by 50 bps.

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On Thursday, news outlets reported that a 50 bps Fed rate cut next week was a close call. At the same time, former Fed Governor Bill Dudley said there was a strong case for a super-sized rate cut. As a result, gold traders cheered the likelihood of aggressive policy easing. Lower borrowing costs increase the attractiveness of non-yielding gold.

The rise in Fed rate cut expectations came a day after US consumer inflation showed price pressures rose more than expected. As a result, investors expected a slow start to policy easing. As a result, the dollar rose, making gold more expensive.

In addition, wholesale inflation beat forecasts, easing pressure on the Fed to cut interest rates. However, the change late Thursday raised the probability of a 50 bps rate cut to 45%. This creates more uncertainty about the FOMC meeting as anything could happen. A smaller discount is likely to disappoint investors after the recent surge in betting. As a result, gold prices could pull back. On the other hand, a 50 bps rate cut could have little impact on gold if traders have already priced in such an outcome.

Key Gold Events Today

There will be no high impact events causing high volatility for gold. Therefore, traders will keep prices at a more significant discount to the US rate.

Gold Price Technical Analysis: Bullish momentum pushes price out of consolidation

Technically, gold broke out of the consolidation to make new highs. The price has risen above the 30-SMA and is approaching the key level of 2580.46. The upside bias is strong as the price is well above the SMA and the RSI is in the overbought region.

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Gold was trapped between 2480.38 support and 2520.09 resistance for a long time. However, a sudden boost in momentum allowed the bulls to continue their previous uptrend. After such a steep move, the price could pull back to the SMA before continuing higher.

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