Gold News: Bullish Sentiment as Fed Cuts and Middle East Tensions Lift Prices
Technically speaking, traders shouldn’t complicate this trade. Simply stated, the “trend is your friend”. With traders buying dips, pay attention to the support. The first minor support level is $2593.52, followed by the swing bottom at $2546.86 and the former top at $2531.77. The major support is the 50-day moving average at $2484.73.
Fed’s Rate Cut Drives Gold Higher
The U.S. Federal Reserve’s decision to cut its interest rate by a larger-than-expected 50 basis points last week has been a key driver behind gold’s rally. This cut reduced the opportunity cost of holding non-yielding assets like gold, boosting its appeal among investors.
Chicago Fed President Austan Goolsbee indicated that more rate cuts are likely in the coming year, further supporting gold’s bullish outlook. Lower interest rates traditionally benefit gold, as they diminish returns on competing assets like bonds.
UBS analyst Giovanni Staunovo highlighted the potential for additional rate cuts and China’s economic stimulus efforts as key factors in gold’s rise. He also noted that any short-term price corrections would likely be seen as buying opportunities, as investors who missed out on the rally may increase their exposure to gold.
China’s Stimulus Adds Mixed Signals to Gold Market
China’s central bank announced its largest stimulus package since the pandemic, aiming to pull its economy out of a deflationary slump. While this could boost Chinese bullion demand, it may also redirect investments toward Chinese equities and real estate. The balance between these alternative assets and gold remains a point of consideration for traders, particularly with China’s economic recovery uncertain.
Gold has risen more than 27% in 2024, bolstered by Middle East conflict and central bank demand for safe-haven assets. Ongoing tensions between Israel and Hezbollah have further driven gold’s status as a store of value, with Israeli military actions in Lebanon adding to global concerns over a wider conflict.