Gold Steadies Below $2,520 as Investors Eye Key Fed Data

Gold prices fell slightly below $2,520 per ounce on Wednesday as investors awaited further indications on the Federal Reserve’s upcoming interest rate decision. This week’s economic data, including the PCE index (the Fed’s preferred measure of inflation) and the revised Q2 GDP figures, are being closely watched. According to the CME FedWatch Tool, traders currently estimate a 71% likelihood of a 25 basis point rate cut and a 29% chance of a more significant 50 basis point reduction in the anticipated September rate cut. Markets are also predicting a total of 100 basis points in rate cuts for the rest of the year, which would decrease the opportunity cost of holding non-interest-bearing assets. This outlook is supported by dovish statements from Federal Reserve officials, who have raised concerns about potential risks to the labor market while maintaining confidence that inflation will return to target. Additionally, gold’s appeal as a safe-haven asset has been reinforced by ongoing tensions in the Middle East.

Technically the first support level is at 2,510. If this level is breached, the next supports to watch will be 2,495 and 2,470. On the upside, the initial resistance is at 2,525; if this level is surpassed, the next targets will be 2,550 and 2,585.