Gold Prices Amidst Rate Cut Speculations
Gold prices are facing potential correction as the US Federal Reserve delaying anticipated rate cuts. Historically, gold prices decrease when interest rates rise, as higher rates increase the opportunity cost of holding non-yielding assets like gold, thereby pressuring prices and boosting US Treasury yields.
Despite this, gold reached an all-time high of US$2,431 earlier this month, driven by a decline in US Treasury yields due to rate cut expectations and ongoing geopolitical tensions in the Middle East. Investors sought refuge in safe-haven assets like gold amid uncertainty.
Federal Reserve Chairman Jerome Powell has noted that recent economic data suggests it may take longer than anticipated for inflation to reach the Fed's 2% target. The Fed's rate-setting committee emphasized the need for confidence in sustained inflation deceleration before reducing rates from a 23-year high.
Technical indicators present a mixed outlook for gold prices. Initial support levels are expected at US$2,240, followed by US$2,144. Investors are advised to monitor the situation closely, considering both macroeconomic factors and technical indicators, to make informed trading decisions amidst the evolving market landscape.
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