Gold pushes to new highs as media revives debate over Fed rate cuts
Gold
(XAU/USD) is exchanging hands in the $2,580s on Friday, trading about
0.90% higher on the day after posting new record highs on Thursday when
it broke decisively out of a range it had been oscillating in since it
peaked on August 20.
The initial catalyst for the breakout was the release of mixed “factory gate” price inflation data, or Producer Price Index
(PPI) data out of the US for August. The figures showed a
deeper-than-expected slowdown in headline PPI, and although core PPI
remained sticky, the market reacted as if the data was disinflationary.
Gold extends rally after media reignites debate over 0.50% vs 0.25% Fed cut
Gold continued to rally during Friday’s Asian session due to the
revival of the debate over whether the Federal Reserve (Fed) will cut
interest rates by 0.50% or 0.25% at its meeting next Wednesday.
The release of still-high core consumer price inflation data, in the
form of the Consumer Price Index (CPI) on Wednesday, had seemingly put
to bed hopes of a “jumbo” 0.50% (50 pbs) cut. However, an article by a
respected The Wall Street Journal (WSJ) Fed
Watcher Nick Timiraos, as well as comments from former President of the
New York Fed William Dudley, suggested a 0.50% should still be
considered. This, in turn, led to a fall in US Treasury yields, a
sell-off in the US Dollar (USD), and a rally in Gold’s price.
Lower interest rates
are positive for Gold because it reduces the opportunity cost of
holding the non-interest-bearing asset, making it more attractive to
investors.
Technical Analysis: Gold pushes to record highs as broad uptrend resumes
Gold (XAU/USD) breaks out of its multi-week sideways range and surpasses the previous record highs of $2,531.
The longer-term trend for Gold is bullish, and according to technical
analysis theory, since “the trend is your friend,” this favors a
continuation of the uptrend.
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Gold (XAU/USD) is exchanging hands in the $2,580s on Friday, trading about 0.90% higher on the day after posting new record highs on Thursday when it broke decisively out of a range it had been oscillating in since it peaked on August 20.
The initial catalyst for the breakout was the release of mixed “factory gate” price inflation data, or Producer Price Index
(PPI) data out of the US for August. The figures showed a
deeper-than-expected slowdown in headline PPI, and although core PPI
remained sticky, the market reacted as if the data was disinflationary.
Gold extends rally after media reignites debate over 0.50% vs 0.25% Fed cut
Gold continued to rally during Friday’s Asian session due to the revival of the debate over whether the Federal Reserve (Fed) will cut interest rates by 0.50% or 0.25% at its meeting next Wednesday.
The release of still-high core consumer price inflation data, in the form of the Consumer Price Index (CPI) on Wednesday, had seemingly put to bed hopes of a “jumbo” 0.50% (50 pbs) cut. However, an article by a respected The Wall Street Journal (WSJ) Fed Watcher Nick Timiraos, as well as comments from former President of the New York Fed William Dudley, suggested a 0.50% should still be considered. This, in turn, led to a fall in US Treasury yields, a sell-off in the US Dollar (USD), and a rally in Gold’s price.
Lower interest rates
are positive for Gold because it reduces the opportunity cost of
holding the non-interest-bearing asset, making it more attractive to
investors.
Technical Analysis: Gold pushes to record highs as broad uptrend resumes
Gold (XAU/USD) breaks out of its multi-week sideways range and surpasses the previous record highs of $2,531.
The longer-term trend for Gold is bullish, and according to technical analysis theory, since “the trend is your friend,” this favors a continuation of the uptrend.