Yesterday, gold prices surged over 1.8% to hit a record high, reaching $2,571.00 per ounce today. This increase was driven by expectations of a US Federal Reserve rate cut next week, following signs of a slowing economy. The rise was fueled by slightly higher-than-expected producer prices and increased jobless claims, signaling potential economic weakness. Markets are betting on a 25-basis-point rate cut at the Fed's upcoming meeting. Lower interest rates typically boost gold's appeal as a zero-yield investment. In addition to gold, silver saw gains of over 4.3% yesterday, and palladium gained 3.5%.
Overview
Yesterday, gold prices surged over 1.8% to hit a record high, reaching $2,571.00 per ounce today. This increase was driven by expectations of a US Federal Reserve rate cut next week, following signs of a slowing economy. The rise was fueled by slightly higher-than-expected producer prices and increased jobless claims, signaling potential economic weakness. Markets are betting on a 25-basis-point rate cut at the Fed's upcoming meeting. Lower interest rates typically boost gold's appeal as a zero-yield investment. In addition to gold, silver saw gains of over 4.3% yesterday, and palladium gained 3.5%.
Technical Analysis
After breaking through the all-time high price of 2531.64 established on August 20, Gold climbed higher, propelled by positive market sentiment to establish another all-time high, this time at $2,570.27 per troy ounce.
As the Bollinger Bands opened and prices started to close above the Upper Band, it's an indication of the continuation of the uptrend. With weekly gains of more than 2.77%, Gold's upward trajectory is supported by the 50-period Exponential Moving Average (EMA), the Momentum oscillator, and the Relative Strength Index (RSI). Specifically, prices hover above the 50-period EMA while the Momentum oscillator and the RSI record values above the 100 and the 50 baselines, respectively.
Upon closer examination, a negative divergence between the oscillators and the price suggests a potential downward correction.
Potential Upside Targets
If the bulls maintain control of the market, traders may consider the following four potential upside targets:
2564.30: The first resistance is established at 2564.30, corresponding to the 161.8% Fibonacci Extension between the swing high of 2529.00 and the swing low of 2471.88.
2584.20: The second price target is identified at 2584.20, representing the weekly resistance (R3) calculated using the standard Pivot Points method.
2621.42: The third price target level is established at 2621.42, representing the 261.8% Fibonacci Extension between the swing high of 2529.00 and the swing low of 2471.88.
2713.84: An additional price objective is recognized at 2713.84, aligning with the 423.6% Fibonacci Extension between the swing high of 2529.00 and the swing low of 2471.88.
Potential Downside Targets
If the bears take control of the market, traders may find potential opportunities in the following four downside targets:
2531.64: The initial level of support is seen at 2531.64, corresponding to the daily high marked on August 20.
2493.70: The second level of support is established at 2493.70, which corresponds to an internal trendline.
2471.88: The third level of support is identified at 2471.88, representing the swing low formed on September 4.
2442.09: An additional support is seen at 2442.09, reflecting the weekly support (S2) estimated using the standard method.
Fundamentals
Yesterday, gold prices surged over 1.8% to hit a record high, reaching $2,571.00 per troy ounce today. This increase was driven by expectations of a US Federal Reserve rate cut next week following signs of a slowing economy. The rise was fueled by slightly higher-than-expected producer prices and increased jobless claims, signaling potential economic weakness. Markets are betting on a 25-basis-point rate cut at the Fed's upcoming meeting. Lower interest rates typically boost gold's appeal as a zero-yield investment. In addition to gold, silver saw gains of over 4.3% yesterday, and palladium gained 3.5% respectively.
Conclusion
In conclusion, gold's surge to a record high of $2,571 per ounce is driven by market anticipation of a Federal Reserve rate cut amid signs of economic slowdown, such as rising jobless claims and slightly higher-than-expected producer prices. This environment makes gold increasingly attractive as a zero-yield investment, with technical indicators supporting the uptrend. However, potential downside risks remain, as indicated by negative divergence between oscillators and price action. Traders should monitor both upside and downside targets, with the broader economic backdrop likely to influence future price movements. Silver and palladium have also benefited from these dynamics, highlighting a strong outlook for precious metals in the near term.