Gold’s remarkable rally continues, soaring 26.9% year-to-date, driven by safe-haven demand and expectations of Federal Reserve rate cuts, which have now begun. However, the Fed’s recent tone wasn’t as dovish as some hoped, signalling that further cuts may be more restrained than market predictions. Currently, traders are pricing in as much as 125 bps of rate reductions this year.
But the situation feels precarious—any uptick in labour market strength could reverse gold’s fortunes swiftly. More clarity is expected as Fed Chair Jerome Powell and other officials prepare to speak this week. Additionally, the PCE price index, a key inflation gauge, will be released on Friday and may influence the Fed’s next move.
Analysts are increasingly eyeing the $3,000 per ounce mark, with some predicting it could be reached by year’s end, particularly if the Fed cuts rates again in November. For now, buying the dip remains the prevailing strategy as gold benefits from a softer dollar and lower Treasury yields.
Spot gold (XAU/USD) reached an overnight high of $2,631.19, and by 10:40 GMT, was trading at $2,619.86.
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