Are Federal Reserve officials about to back off? Gold prices break through $3,800 unstoppable
On Monday's Asian early session, gold prices broke through USD 3,800 per ounce, as U.S. inflation data met expectations, enhancing market expectations for a Federal Reserve rate cut. Low interest rates reduce the opportunity cost of holding gold, while geopolitical tensions increase demand for safe-haven assets. Investors are paying attention to the speeches of Federal Reserve officials; hawkish comments may lead to a rebound in the dollar, suppressing gold prices, while dovish signals could continue to drive gold prices higher. Technical analysis shows that gold prices remain in a strong upward trend and may rise to the range of USD 3,900 to 4,000 in the future
On Monday morning in Asia, the price of gold (XAU) continued to rise, breaking through $3,800 per ounce. The previously released U.S. inflation data met expectations, further strengthening market anticipation for the Federal Reserve to cut interest rates again this year. Lower interest rates reduce the opportunity cost of holding such non-yielding assets, thereby enhancing the bullish trend for gold. Additionally, geopolitical tensions have also boosted safe-haven demand, providing extra support for gold prices.
The current market focus is shifting to the remarks of Federal Reserve officials later today. Investors will carefully interpret the speeches of Waller, Harmack, Musalem, Williams, and Bostic. If their tone turns hawkish, the dollar may rebound, pausing the current short-term rise in gold prices. Conversely, if dovish signals are released, it will strengthen the current easing expectations and continue the upward momentum of gold prices. This makes the Federal Reserve's external communication a key driving factor for recent trends.
The August Personal Consumption Expenditures (PCE) report confirmed an annualized inflation rate of 2.7%, while core PCE remained at 2.9%. These figures align with expectations, indicating that the Federal Reserve still has room to continue gradually cutting rates without triggering new inflation concerns. This outlook creates a favorable macro environment for gold, with loose policies and stable inflation jointly supporting further increases in gold prices.
Gold Technical Analysis: Prices in a Strong Uptrend
XAUUSD Daily Chart – Source: TradingView
The daily chart for spot gold shows that after breaking through $3,500, a bullish continuation pattern has formed. This indicates that spot gold is still in a healthy uptrend, with no significant signs of a pullback. Therefore, in the coming days and even weeks, gold prices may continue to rise to the range of $3,900 to $4,000
