Gold prices are on the rise, moving closer to a two-week high as investors focus on the upcoming US Nonfarm Payrolls (NFP) report. The US Dollar is weakening for the fourth consecutive day, as expectations for a September rate cut by the Federal Reserve gain momentum. This has boosted the appeal of gold as a safe-haven asset.
Geopolitical tensions and political uncertainties in the US and Europe are also contributing to the positive outlook for gold. However, the current risk-on sentiment in the global equity markets may limit the gains for gold as traders await the NFP report to gauge the strength of the US economy.
Looking at the technical analysis, bullish momentum is building up for gold prices, with a potential breakout above $2,365. If this level is breached, it could pave the way for a move towards the $2,400 mark and even challenge the previous peak of $2,450. On the downside, a dip below $2,319 could signal a potential weakening of gold prices towards the $2,285 support level.
The Federal Reserve plays a crucial role in shaping monetary policy in the US, with a dual mandate of achieving price stability and full employment. Interest rate adjustments are the primary tool used by the Fed to achieve these goals. Expectations for a September rate cut have been fueled by recent weaker US economic data, which has weighed on the US Dollar.
In conclusion, the outlook for gold prices remains positive as investors await the NFP report for further direction. The Fed’s monetary policy decisions will continue to influence the US Dollar and, in turn, the demand for gold. Traders should keep a close eye on key levels and market developments to make informed investment decisions in the current economic environment.