Gold Analysis Today 19/9: Targeting $2600 Per Ounce (Chart)

(MENAFN- Daily Forex)

• Gold retreated to $2563 after almost hitting a new record high of $2600/oz as investors digested the latest US federal Reserve decision.
• The Fed delivered a larger-than-expected 50 basis point cut in US interest rates, the first in more than 4 years.
• Also, The US central bank released updated economic forecasts.
• Policymakers expect a total of 100 basis point cuts by the end of the year, suggesting two more 25 basis point cuts in the final two meetings of the year. However, during the regular press conference, Fed Chairman Jerome Powell indicated that the Fed is in no rush to ease policy and that the dot plot forecast for the federal funds rate is not a policy plan.

Regarding factors indicating the gold market, the US dollar is retracing some losses after returning to a 14-month low. According to licensed trading platforms, the US Dollar Index (DXY) fell to its lowest levels since July 2023 at 100.4, before paring some losses to settle at 100.7 on Wednesday. Obviously, that's after the Federal Reserve delivered a massive 50 basis point rate cut at its September 2024 meeting. While the rate cut decision was expected, there had been speculation over whether the central bank would opt for a more conservative 25 basis point cut instead.

Also, US policymakers have indicated further 50 basis point cuts for the rest of the year and a full percentage point of cuts for next year. Now, traders are pricing in further easing from the US Federal Reserve following revised expectations from the so-called dot plot. Meanwhile, US Federal Reserve Chairman Jerome Powell indicated during his regular press conference that the Fed is in no rush to ease policy and that the dot plot forecast for the federal funds rate is not a policy plan.

According to Forex trading, the US dollar has seen broad weakness, but the biggest losses were recorded against the British pound and the Japanese yen.

Another factor affecting gold, the rise in the US 10-year Treasury bond yield to 3.7%. According to trading, the yield on the US 10-year Treasury bond rose to 3.7%, after rising from a 15-month low of 3.62% on Monday as financial markets assessed the outlook for US monetary policy after the Federal Reserve began its rate-cutting cycle.

According to the economic calendar, the US Federal Reserve cut interest rates by 50 basis points, the first rate cut since 2020, and more aggressive than the 25 basis points expected by nearly half the market, which was the most ambiguous decision by the central bank since 2007. Furthermore, bond yields rose after this move. Moreover, quickly erased their gains after Fed Chairman Powell confirmed that the US economy remains strong and that the Federal Open Market Committee (FOMC) is in no hurry to continue easing monetary policy despite today's aggressive cut, stressing that US interest rate cuts of 50 basis points should not be considered a“new pace.”

The median forecast indicates 100 basis points in total interest rate cuts this year, which translates to 25 basis points in its remaining two meetings this year. Also, the US central bank maintained the pace of its quantitative tightening program at $25 billion per month.

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According to today's gold analysts' expectations, the general trend of gold prices is still rising strongly and there will be no first break of the general trend of the gold index. According to the current gold prices without breaching the levels of $2500 and $2475 per ounce respectively. In contrast, the psychological resistance of $2600 per ounce will remain an important psychological barrier for the strength of bulls' control over the trend in the coming days.

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