Article by: ETO Markets
As the Fed's key policy decision nears, gold prices have seen a small pullback after hitting an all-time high, but overall remain supported by a number of factors. Investors widely expect the Fed to cut interest rates by 50 basis points at its meeting this week, weakening the dollar and driving demand for gold. Nevertheless, the market remained cautious, waiting for policy updates from the Federal Reserve, Bank of England and Bank of Japan before making further trading decisions.
In addition to Fed rate cut expectations, geopolitical risks, such as the intensifying conflict in the Middle East and North Korea's missile tests, are also driving safe-haven demand for gold. In addition, political uncertainty in the United States and concerns about a slowdown in the Chinese economy have further strengthened gold's appeal as a safe-haven asset. As a result, despite a small correction in gold prices, the overall downside seems limited and investors will still buy the dips.
Technical graphics show that the volatility of gold prices near recent all-time highs remains strong. Bulls will likely wait for gold to break through the all-time high in the $...-… area, further pushing gold toward the top of the upward channel at $.... If gold can decisively break through this resistance level, it will confirm the new uptrend, and gold is expected to continue to extend the rally.
Conversely, if gold falls below the overnight low of $..., the likelihood of a further pullback will increase. The lower support level is expected to be in the $...-… area, a break below this level would see the psychological $... level become the next important support level, and any break below this level could trigger more selling, with the potential for gold to fall further to the $...- $... area.
