Expectations of a Fed rate cut and escalating geopolitical tensions push gold prices higher
2025-09-24 13:26:34
Spot gold found buying support around $3,750 during Asian trading hours on Wednesday, ending an overnight pullback from its all-time high.
Market bets on the Federal Reserve continuing to cut interest rates in October and December have increased the appeal of non-yielding assets. Furthermore, friction between Russia and NATO and escalating conflicts in the Middle East have provided safe-haven demand for gold. Meanwhile, a slight deterioration in global risk sentiment has further boosted gold prices.
However, the dollar rebounded after a speech by Federal Reserve Chairman Powell. Powell emphasized the central bank's need to maintain a careful balance between high inflation and weak employment, and warned that excessive easing could lead to policy reversals. This led to renewed buying of the dollar after two consecutive days of decline, thus suppressing gold's upside in the short term.
Analysts' view: "Gold's fundamentals remain bullish, but the rebound of the US dollar and overbought signals put gold prices at risk of a short-term correction. Investors need to wait for the core PCE data to confirm the Fed's policy direction."
From a technical perspective, gold's recent surge has clearly broken through overbought territory. Although it has found support at $3,750, it has failed to hold above $3,800. If gold falls below $3,750, it will face support between $3,710 and $3,700, a break of which could trigger a further correction.
If it can effectively break through and stabilize above $3,800, it may push bulls to regain control and continue the strong upward trend of the past month. Overall, gold still maintains a medium- to long-term bullish pattern, but the short-term trend may fluctuate and consolidate in the $3,750-3,800 range.
Editor's opinion:
Gold's current trend reflects the balancing act between safe-haven demand and a rebounding US dollar. Expectations of a Fed rate cut and escalating geopolitical tensions are key supporters for gold prices. However, if it fails to break through $3,800 in the short term, caution is warranted regarding a potential market correction driven by profit-taking. Subsequent core PCE data will be crucial in determining whether gold can break out of its range.
Market bets on the Federal Reserve continuing to cut interest rates in October and December have increased the appeal of non-yielding assets. Furthermore, friction between Russia and NATO and escalating conflicts in the Middle East have provided safe-haven demand for gold. Meanwhile, a slight deterioration in global risk sentiment has further boosted gold prices.
However, the dollar rebounded after a speech by Federal Reserve Chairman Powell. Powell emphasized the central bank's need to maintain a careful balance between high inflation and weak employment, and warned that excessive easing could lead to policy reversals. This led to renewed buying of the dollar after two consecutive days of decline, thus suppressing gold's upside in the short term.
Analysts' view: "Gold's fundamentals remain bullish, but the rebound of the US dollar and overbought signals put gold prices at risk of a short-term correction. Investors need to wait for the core PCE data to confirm the Fed's policy direction."
From a technical perspective, gold's recent surge has clearly broken through overbought territory. Although it has found support at $3,750, it has failed to hold above $3,800. If gold falls below $3,750, it will face support between $3,710 and $3,700, a break of which could trigger a further correction.
If it can effectively break through and stabilize above $3,800, it may push bulls to regain control and continue the strong upward trend of the past month. Overall, gold still maintains a medium- to long-term bullish pattern, but the short-term trend may fluctuate and consolidate in the $3,750-3,800 range.
Editor's opinion:
Gold's current trend reflects the balancing act between safe-haven demand and a rebounding US dollar. Expectations of a Fed rate cut and escalating geopolitical tensions are key supporters for gold prices. However, if it fails to break through $3,800 in the short term, caution is warranted regarding a potential market correction driven by profit-taking. Subsequent core PCE data will be crucial in determining whether gold can break out of its range.
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