Article by: ETO Markets

Gold prices (XAU/USD) are mainly driven by expectations of Fed rate cuts and geopolitical risks. The growing likelihood that the Federal Reserve will cut interest rates at its September meeting has reduced the attractiveness of the dollar and supported non-yielding gold. The Fed minutes showed a growing number of policymakers were in favour of a rate cut, particularly as US inflation eased. At the same time, adjustments to U.S. jobs data indicated weaker job growth than previously reported, raising the likelihood of future interest rate cuts by the Federal Reserve. In addition, global geopolitical tensions, especially in the Middle East, remain unsettled, providing additional support for gold as a safe-haven asset. In particular, the conflict between Israel and Hamas has failed to reach a ceasefire, raising concerns about potential risks in the region. China's economic weakness is also supporting risk aversion to some extent.

From a technical point of view, the gold price is hovering above the psychological level of $… and continues to show a bullish pattern. Although gold prices briefly fell to near $…, this level has become an important support. If gold continues to hold above this support, it will likely re-challenge the resistance in the $…-… area and eventually test the all-time high of $…-…. A break above this all-time high could further fuel bullish momentum and extend the uptrend. On the other hand, an effective break below the $… level could trigger a fresh technical sell-off down to the next support at the $…-… area and possibly even a further pullback to the round $… mark near the 50-day Simple Moving Average (SMA). As a result, bulls remain dominant in the short term, but the market needs to keep a close eye on the performance of key support and resistance levels.