The Fed announced its first rate cut of 25 basis points last Wednesday, spurring gold to strengthen as low interest rates boost the attractiveness of interest-free assets. Spot gold was $3688.40 per ounce, just $20 away from its all-time high.
However, Federal Reserve Chairman Powell stressed that the future policy will adopt a “sequence-by-conference” assessment method, which will cool down the market’s expectations of rapid interest rate cuts, and gold prices will temporarily fall after rising.
Market analysts pointed out: “Even though the pace of interest rate cuts slowed down, the overall upward trend of gold prices has not changed because the market still has strong expectations for further easing.”
The focus of the market this week will be the US personal consumption expenditure (PCE) price index, which is a measure of inflation preferred by the Federal Reserve. If the data shows that the price increase slows down, it will further strengthen the expectation of additional interest rate cuts this year.
Meanwhile, Powell will deliver an economic outlook speech on Tuesday, which may once again affect market sentiment. According to market research, traders currently expect that there is still a possibility of close to two rate cuts this year.
Driven by this, gold’s cumulative increase this year has reached nearly 40%. In addition to interest rate expectations, geopolitical conflict risks, global economic uncertainty brought about by US tariff policies, and the continued support of central banks in various countries’ continued increase in gold purchases and ETF positions , all provide additional upward momentum for gold prices.
In addition, other precious metals are relatively stable. Silver and platinum remained stable, while palladium recorded a slight increase. Meanwhile, the US dollar index rose slightly by 0.1%, but failed to put a significant suppression on gold.
The daily chart shows that spot gold has formed strong support around US$3,650, and the short-term resistance level is concentrated at the US$3,700 mark. If it breaks through this level, it is expected to hit the historical high of US$3,710-3,720 area again.
The moving average system maintains a bullish arrangement, and MACD is still in the positive momentum range, but the momentum column has narrowed, indicating that the upward trend has slowed down. If the price falls below $3650, it may pull back to $3600 integers to seek new support.
Gold trends are currently driven by the dual driving of Fed policy expectations and safe-haven demand. In the short term, if PCE inflation data slows down this week, gold prices may approach or even break through historical highs again; but if the data exceeds expectations, it may trigger market adjustments.
