Gold Analysis: Gold Hits New Record High – 18 July 2024

-- Gold hit a new all-time high as it moved towards the $2,483 resistance level per ounce, with gains driven by growing optimism that the Federal Reserve will cut US interest rates as early as September.
-- On Monday, Federal Reserve Chairman Jerome Powell indicated that lower-than-expected U.S. inflation in June boosted confidence in achieving the price growth target.
-- He added that the central bank would not wait until inflation hits 2% before starting to cut interest rates.
-- This sentiment was echoed by Federal Reserve Governor Adriana Kugler, who expressed cautious optimism on Tuesday that inflation is moving towards the target rate. ;

In general, financial markets are fully expecting the Fed to cut rates at its September meeting, according to the CME’s FedWatch tool, with traders preferring to bet on three 25 basis point rate cuts instead of two this year. Moreover, expectations that other major central banks in Europe and Asia will also cut rates have boosted demand for precious metals in those regions. ;

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As for the factors affecting the gold market, the dollar price is at its lowest level in 4 months. According to electronic trading platforms, the dollar index fell to 103.7 on Wednesday, extending its losses for a second day to reach a low level not seen in about four months, as traders will fully price in the Federal Reserve to cut interest rates in September. On Monday, Chairman Powell said that recent data “adds somewhat to the confidence” that inflation will return to target and that the central bank will not wait until inflation reaches 2% before cutting interest rates. New York Federal Reserve President John Williams also said that “inflation is coming down to 2% and the economy is coming back into balance right now. I think we’ve had a few months of encouraging data.” ;

According to forex trading, dollar was the most bearish against the Japanese yen, falling by about 1.3%. The dollar also lost ground against the British pound after the UK inflation rate failed to slow. ;

Another factor affecting gold, the yield on the US 10-year bond is hovering at its lowest level in 4 months. According to the trading, the yield on the US 10-year Treasury note settled at around 4.17%, hovering at its lowest level in four months amid strong expectations that the Federal Reserve will begin cutting interest rates in September, with two more cuts expected before the end of the year. According to the results of the economic calendar, Data on Tuesday showed that US retail sales were unchanged in June as a decline in auto sales was offset by increased activity in other sectors. Earlier this week, Federal Reserve Chairman Jerome Powell said that the recent data “adds some confidence” that inflation will return to target and that the central bank will not wait until inflation reaches 2% before cutting interest rates. ;

Also, Fed Governor Adriana Kogler expressed cautious optimism that inflation will return to target. Now, Investors look forward to the release of the Fed’s Beige Book on Wednesday, in addition to housing starts and building permits data for June. Ultimately, the weekly US jobless claims number. ;

Gold Price Forecast and Analysis Today: ;

According to the daily chart above, the overall upward trend for gold prices is strengthening, with recent gains pushing technical indicators towards strong overbought levels. Furthermore, Profit-taking sales will not occur without a recovery in the U.S. dollar and easing global geopolitical tensions. Otherwise, the bulls are likely to push towards a new record high of $2500 per ounce. ;

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Original Source DailyForex.com provides daily fundamental and technical analysis and signals for those looking to trade based on trends in the currency markets.