Gold prices have remained on the decline as traders’ cautious attitude towards the possibility of future interest rate cuts by the Federal Reserve and the strengthening of the US dollar have curbed the recent rise in gold.
Gold prices were about $60 lower than the record high set on Wednesday, which was triggered by the Federal Reserve’s announcement of a 25 basis point interest rate cut. The price of gold fell after Fed Chair Jerome Powell’s remarks on the monetary policy path were less dovish than expected. He said officials were “discussing at each meeting” whether to further ease monetary policy. Low interest rates are usually beneficial to gold because it does not generate a yield.
Powell’s stance also boosted the US dollar, which is unfavorable for gold as it makes the cost of purchasing gold in other currencies higher.
Traders are still digesting expectations of nearly two rate cuts this year. The anticipation of the Fed’s monetary easing has been the main catalyst for gold’s 38% surge this year. Safe-haven demand for 2025 has also supported gold prices, driven by concerns over geopolitical conflicts, the impact of President Donald Trump’s tariffs on the global economy, and the increase in central bank purchases and holdings of exchange-traded funds (ETFs).
Looking ahead, the government’s attacks on the Fed’s independence could further consolidate the rally. Fed governor Lisa Cook is embroiled in a legal dispute with Trump, who tried to fire her on the grounds of mortgage fraud. Government economic advisor Stephen Milian was rapidly promoted to the Fed to fill a temporary vacancy. He was also the only one who voted against the rate cut decision on Wednesday, preferring a half-percentage-point cut.
Zijin Gold International Co., China’s largest mining company, is seeking a Hong Kong initial public offering (IPO) to raise $3.2 billion, which is expected to be the world’s largest IPO since May. Zijin Gold will start trading on September 29. The rise in gold prices has provided a boost for mining companies to raise funds for further expansion and debt repayment.
Technical analysis:
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Gold: After the Federal Reserve cut interest rates by 25 basis points, the price remained in a range of 3630-3670. Considering the factor of Friday, we retain the yellow low-sweep liquidity buy and also the direct buy stop after the blue momentum breaks above. For detailed positions, please consult the plugin.
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The Nasdaq: The rate cut has provided relatively effective support for prices, but the behavior of sweeping liquidity occurs every day. We should not miss such signals in our operations. It is not recommended to directly break through and go long. Instead, we should wait for the rebound after the sweep near 24,350 and then take long positions. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: The price remains within the channel, consolidating with limited fluctuations. For the day, it is recommended to hold onto the rebound long positions after the pullback from the lower channel boundary. Also, keep an eye on whether the price can break through the upper channel boundary to trigger a new pullback for long positions. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key economic data and events to focus on:
14:00 UK August seasonally adjusted retail sales
At 14:30, Bank of Japan Governor Kazuo Ueda holds a monetary policy press conference.
15:00 German Producer Price Index for August
18:00 UK CBI Retail Sales Expectations Index for September
