Article by: ETO Markets

On Thursday, Gold prices (XAU/USD) rose slightly to near $2,470 per Troy ounce, near record highs. The main factor driving up gold prices is the market's increased expectations that the Federal Reserve will cut interest rates in September. Federal Reserve Governor Christopher Waller said the US central bank was "getting closer" to cutting interest rates. Richmond Fed President Thomas Barkin also noted that the easing in inflation has begun to broaden. The comments added to market confidence in a Fed rate cut, with the market now pricing in a 93.5 percent chance of a 25-basis point rate cut at the September meeting, according to CME Group's FedWatch tool. In addition, US retail sales data for June were largely in line with expectations, with retail sales holding steady in June after a 0.3% increase in May. The data are consistent with comments from Fed Chairman Jerome Powell, who said the three US inflation data for the second quarter "slightly increased confidence that inflation is moving toward the Federal Reserve's objective in a steady manner."

From a technical point of view, the gold/dollar pair is currently trading around $… and consolidating within the uptrend channel. Daily chart analysis shows that the 14-day Relative Strength Index (RSI) is just below 70, indicating a bullish trend, but also indicating that the asset is overbought, and a correction is expected in the near term. If gold breaks the upper boundary of the upward channel at $…, it could test the psychological level of $…. On the downside, the first resistance level is in the $… area at the shoulder of the previous head-and-shoulders top. If it breaks below, it could test $…. Overall, with the market's interest rate cut expectations heating up, gold prices are expected to continue to rise in the short term. However, investors need to be cautious about the risk of a potential pullback from the dollar rally and technical overbought conditions.