GOLD Analysis
Afternoon: Gold Prices Hold Steady Amid Anticipation of Federal Reserve's Interest Rate Decision
Highlights:
- Gold prices remained stable as markets await the Fed's rate decision, with a 64% chance of a 50-basis-point cut.
- U.S. retail sales rose unexpectedly by 0.1% in August, indicating economic resilience.
- Support and resistance for gold set at $2550 and $2600, with traders advised to sell on a rise around $2580.
Overview:
Gold prices remained stable as investors awaited the highly anticipated decision from the Federal Reserve, which is expected to lower interest rates for the first time in over four years. This comes after an unexpected 0.1% increase in U.S. retail sales for August, signaling resilience in the economy during the third quarter. The Fed is set to announce its decision later today, followed by a press conference by Chair Jerome Powell, where further insights into the central bank’s future policy direction will be revealed. The last rate cut occurred in March 2020, during the COVID-19 pandemic. Market expectations for a 50-basis-point rate cut have increased to 64%, compared to 43% last week, while the odds of a smaller 25-basis-point cut have diminished, reflecting growing sentiment for more aggressive easing.
Economic Indicators to Watch Key economic data scheduled for release includes the Final Core CPI y/y and Final CPI y/y from the Euro Zone, as well as Building Permits and the outcome of the FOMC meeting in the US.
Actionable Strategy Traders are advised to sell gold on a price rise around $2575-80, with a target of $2560 and a stop loss below $2594.
Technical Outlook Gold prices are currently trading within a narrow range, reflecting caution in the markets as participants await clearer signals from the Fed. On the technical front, prices are holding above the key support level of $2550, which may act as a floor in the near term. However, the upside appears capped at $2600, with any break above this level likely to trigger further bullish momentum. Conversely, a break below $2550 could see prices slip toward $2520, reinforcing the importance of the Fed’s decision in shaping short-term trends.
The U.S. economy has shown mixed signals, with stronger-than-expected retail sales balancing out some concerns over slowing growth. However, persistent inflationary pressures could push the Fed toward more aggressive easing, which would be supportive of gold prices. Traders should closely monitor the Fed's announcements and any accompanying commentary from Powell, as these will significantly influence gold’s next directional move.
Support and Resistance Levels:
