Gold Prices Remain Strong with Fed Rate Cut on the Horizon

Gold remained steady at around $2,510 per ounce on Monday, staying near record highs following Federal Reserve Chair Jerome Powell’s reinforcement of expectations for an interest rate cut in September. In his speech at Jackson Hole last week, Powell signaled that the Fed is ready to adjust its policy, with the timing and scale of rate cuts contingent on upcoming economic data. He highlighted increased risks to the job market while noting a decrease in inflation risks. The Federal Open Market Committee (FOMC) now feels more confident that inflation is moving towards the 2% target, strengthening the argument for lowering borrowing costs. Market expectations are divided between a 25 basis point or 50 basis point cut at the Fed's September meeting, but investors are anticipating a total of 100 basis points in rate cuts for the remainder of the year. This would lower the opportunity cost of holding assets that do not yield interest. Additionally, gold's appeal as a safe-haven asset was enhanced by growing concerns about a potential broader conflict in the Middle East.

Technically the first support level is at 2,500. If this level is breached, the next supports to watch will be 2,470 and 2,430. On the upside, the initial resistance is at 2,532; if this level is surpassed, the next targets will be 2,550 and 2,600.