Gold soared above 3690 to hit a new record high! The Fed is about to cut interest rates, and gold bulls are still dominant
2025-09-16 15:26:49
Spot gold surged strongly during the Asian and European trading sessions on Tuesday (September 16), rising 0.40% and setting a new all-time high. As of 3:20 PM, it reached a high of $3,694.07 per ounce, and fluctuated around $3,692 during the European session. Gold prices were driven by a combination of factors, including a weak US dollar index and declining US Treasury yields. The most anticipated event was the Federal Reserve's FOMC interest rate decision, announced on September 17 (local time, September 18, Beijing time).
The market generally expects the Federal Reserve to cut interest rates by 25 basis points and release updated economic forecasts. Fed Chairman Powell's speech and the policy signals released at the meeting will influence expectations for the future path of interest rates, thereby driving the trend of the US dollar and the interest-free asset gold.
In addition to the Fed, markets this week will also focus on the Bank of Canada's policy decision on Wednesday, the Bank of England's interest rate decision on Thursday, and the results of the Bank of Japan's two-day meeting (to be announced on Friday).
These events could exacerbate gold price volatility. Continued escalation in geopolitical tensions may continue to provide support for safe-haven gold.
The daily gold chart shows that gold is severely overbought, and coupled with positive market risk sentiment, it may suppress the willingness of bulls to further build positions.
Gold continues to draw support from a weaker dollar and geopolitical risks stemming from a dovish Fed
Against the backdrop of fundamental support, the downside space for spot gold remains limited.
Markets increased bets on more aggressive policy easing from the Federal Reserve after weak U.S. non-farm payrolls (NFP) data for August.
The Fed is expected to cut interest rates three times this year, according to CME Group's FedWatch tool.
The U.S. Senate voted to confirm Stephen Miran, an aide to President Trump, to join the Federal Reserve's board of governors. The decision came after a U.S. federal appeals court ruled that Trump cannot fire Fed Governor Tim Cook, and also ahead of the two-day Federal Open Market Committee meeting that is about to begin on September 16.
Meanwhile, the Federal Reserve's dovish outlook caused the dollar to extend its recent decline, hitting its lowest level since July 24, which will continue to provide support for gold, a non-interest-bearing asset.
Furthermore, the escalating conflict between Russia and Ukraine could limit the downside for this safe-haven commodity. Russian forces launched a large-scale attack on the southeastern Ukrainian city of Zaporizhia, following repeated Ukrainian attacks on Russian oil infrastructure in recent weeks. Furthermore, Trump's repeated threats of tougher measures against Russia continue to fuel geopolitical risks.
An emergency summit of Arab and Islamic leaders condemned Israel's attack on Hamas leaders in Doha, the capital of Qatar, on September 9. The summit's joint statement urged member states to coordinate actions to suspend Israel's UN membership.
U.S. monthly retail sales and industrial production data due later on Tuesday may struggle to provide significant momentum.
Gold bullish flag breakout pattern begins to emerge, and the daily relative strength index is overbought, so be vigilant
(Spot gold one-hour chart, source: Yihuitong)
The previous session’s strong upward move marked a breakout above a bullish flag pattern, a strong signal that the previous day’s upward trend is likely to continue into the next few days.
However, the daily relative strength index (RSI) remains well above 70, indicating that the market is extremely overbought and caution is warranted before further gains. This means that spot gold may struggle to maintain momentum after breaking through the $3,700 mark, which currently constitutes a key pivot point.
Any substantial technical pullback could attract renewed buying and find effective support at the flag breakout point (around $3,645). However, if subsequent selling pressure causes gold prices to break below the $3,633 support level, further declines to the $3,610-3,600 range are possible. A break below this support level could lead to a deeper correction, potentially towards the psychologically important $3,500 level, with support in the $3,562-3,560 range.
(Spot gold daily chart, source: Yihuitong)
At 15:26 Beijing time, spot gold was trading at $3691.20 per ounce.
The market generally expects the Federal Reserve to cut interest rates by 25 basis points and release updated economic forecasts. Fed Chairman Powell's speech and the policy signals released at the meeting will influence expectations for the future path of interest rates, thereby driving the trend of the US dollar and the interest-free asset gold.
In addition to the Fed, markets this week will also focus on the Bank of Canada's policy decision on Wednesday, the Bank of England's interest rate decision on Thursday, and the results of the Bank of Japan's two-day meeting (to be announced on Friday).
These events could exacerbate gold price volatility. Continued escalation in geopolitical tensions may continue to provide support for safe-haven gold.
The daily gold chart shows that gold is severely overbought, and coupled with positive market risk sentiment, it may suppress the willingness of bulls to further build positions.
Gold continues to draw support from a weaker dollar and geopolitical risks stemming from a dovish Fed
Against the backdrop of fundamental support, the downside space for spot gold remains limited.
Markets increased bets on more aggressive policy easing from the Federal Reserve after weak U.S. non-farm payrolls (NFP) data for August.
The Fed is expected to cut interest rates three times this year, according to CME Group's FedWatch tool.
The U.S. Senate voted to confirm Stephen Miran, an aide to President Trump, to join the Federal Reserve's board of governors. The decision came after a U.S. federal appeals court ruled that Trump cannot fire Fed Governor Tim Cook, and also ahead of the two-day Federal Open Market Committee meeting that is about to begin on September 16.
Meanwhile, the Federal Reserve's dovish outlook caused the dollar to extend its recent decline, hitting its lowest level since July 24, which will continue to provide support for gold, a non-interest-bearing asset.
Furthermore, the escalating conflict between Russia and Ukraine could limit the downside for this safe-haven commodity. Russian forces launched a large-scale attack on the southeastern Ukrainian city of Zaporizhia, following repeated Ukrainian attacks on Russian oil infrastructure in recent weeks. Furthermore, Trump's repeated threats of tougher measures against Russia continue to fuel geopolitical risks.
An emergency summit of Arab and Islamic leaders condemned Israel's attack on Hamas leaders in Doha, the capital of Qatar, on September 9. The summit's joint statement urged member states to coordinate actions to suspend Israel's UN membership.
U.S. monthly retail sales and industrial production data due later on Tuesday may struggle to provide significant momentum.
Gold bullish flag breakout pattern begins to emerge, and the daily relative strength index is overbought, so be vigilant
(Spot gold one-hour chart, source: Yihuitong)
The previous session’s strong upward move marked a breakout above a bullish flag pattern, a strong signal that the previous day’s upward trend is likely to continue into the next few days.
However, the daily relative strength index (RSI) remains well above 70, indicating that the market is extremely overbought and caution is warranted before further gains. This means that spot gold may struggle to maintain momentum after breaking through the $3,700 mark, which currently constitutes a key pivot point.
Any substantial technical pullback could attract renewed buying and find effective support at the flag breakout point (around $3,645). However, if subsequent selling pressure causes gold prices to break below the $3,633 support level, further declines to the $3,610-3,600 range are possible. A break below this support level could lead to a deeper correction, potentially towards the psychologically important $3,500 level, with support in the $3,562-3,560 range.
(Spot gold daily chart, source: Yihuitong)
At 15:26 Beijing time, spot gold was trading at $3691.20 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
