- Summary:
- Gold price has found stability above the $2,500 psychological mark, but the current market sentiment will likely subdue gains.
Gold price rose on Tuesday, edging up by 0.1 percent to trade at $2,510 per ounce at the spot market during the New York session. The yellow metal has found its footing as traders weigh the implications of imminent interest rate cuts by both the Federal Reserve and the European Central Bank (ECB). Stability above the $2,500 psychological mark is significant for gold, but good performance by equities markets this week will limit its upside.
Federal Open Market Committee (FOMC) members will meet next week, and the meeting is expected to result in the first interest rate cut since the Covid-19 pandemic era. The CME FedWatch Tool shows that 73 percent of traders expect a reduction by 25 basis points. Meanwhile, the ECB is expected to slash the Eurozone interest rates by a similar margin this Thursday.
Despite expectations of lower interest rates having been in play for more than a month, gold price has struggled to build a bullish momentum as fears over possible US economic recession triggered a bearish contagion across most asset markets. However, with the Fed interest rate expected to boost investor confidence, many traders will likely go for gold as they seek to diversify their portfolio.
Also, China’s central bank paused gold purchases for fourth month in a row in August, but could return to the market as its economy faces mounting pressure from weak industrial output and property market slump. Elsewhere, US presidential candidates, Donald Trump and Kamala Harris will hold the first debate on Tuesday, and their comments could have far-reaching impacts on global assets markets, including gold prices.
Gold price today
Gold price will likely keep climbing if the action stays above the 2,512 pivot mark. The bullish momentum is likely to initially encounter the first resistance at 2,519, but a persistent push by the buyers could enable them to go above that barrier to test 2,525 in extension.
On the other hand, moving below 2,512 will favour the sellers to take control, with initial support likely to be at 2,506. However, if the sellers extend their control, it could enable them to breach that support and invalidate the upside narrative. Also, that could strengthen the downside momentum to test 2,501.
