06 Sep

Gold rallies as market bets on rapid Fed monetary easing

September 6, 2024

By RoboForex Analytical Department

Gold has returned to growth. On Friday, a troy ounce of the precious metal was priced at 2517 USD. The price has stabilised as the market awaits the release of August’s crucial US employment report. The data could prompt a revision of the Federal Reserve’s interest rate outlook, which is particularly important given the short time left before the Fed meets.

Lower interest rates could reduce the cost of holding gold as a non-yielding asset. Given the weak employment market signals, the market believes the Fed will be forced to act more decisively.

The latest statistics showed that private employers in the US hired at the slowest pace in 3.5 years in August. This follows a decline in the number of job vacancies. In addition, manufacturing activity in the economy declined. All this appears to be a negative factor indicating the state of the US economy and fuelling expectations of a 50-basis points rate cut in September. Investors are currently pricing in a 41% probability of such a scenario, which is relatively high. Considering fundamental factors, it is reasonable to assume that gold prices will continue to rise.

XAUUSD technical analysis

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On the H4 chart, XAUUSD has received support at 2472.00. Currently, the structure of a growth wave towards 2513.62 is being formed. Today, the market is creating a consolidation range around this level. An upside breakout will open the potential for growth towards 2555.50. A break above the 2522.00 level may signal the development of a further growth wave. Technically, this scenario is confirmed by the MACD indicator. Its signal line is above zero and sloping upwards.

On the H1 chart of XAUUSD, the market has completed a growth wave to 2513.62. Currently, the range is extended upwards to the level of 2523.20 and downwards to the level of 2504.00. In the case of a downward breakout, a decline to 2491.55 may occur. Conversely, an upward breakout could continue the trend to 2555.50. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is near the level of 80 and is preparing to decline to 20.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.


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