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MENAFN- Daily Forex)
Gold futures hit another record high as the precious metal continues its sharp and record-breaking gains, fuelled by the Federal Reserve's interest rate cut. Gold has been on a euphoric run, finding support from various developments beyond monetary policy. While the precious metal appears to be in overbought territory, some analysts believe it could touch $2,700 an ounce before seeing a pullback.
According to gold trading platforms, gold futures rose to $2,679.80 per ounce. Overall, gold is up 5% this month and has risen 30% since the beginning of the year. Over the past 12 months, the metal has gained about 39%. In the same performance, silver, gold's sister commodity, rose $1,137, or 4.41%, to $32,455 per ounce. Overall, the price of the white metal rose about 9% in September and has advanced 35% so far this year.
Overall, the metals markets have benefited greatly from the Federal Reserve's shift in monetary policy stance. Federal Reserve officials, including Chicago Fed President Austan Goolsbee, have indicated that more US interest rate cuts are coming over the next year. But it's not just the Eccles Building that has engaged in this easing. Other global central banks, from the European Central Bank to the Bank of Canada to the People's Bank of China, have cut interest rates. As is known, low interest rates reduce the opportunity cost of holding non-yielding bullion.
Meanwhile, geopolitical tensions have further fuelled the gold index. Spot gold prices benefited from Israel's strikes on Hezbollah targets in southern Lebanon, and its vow to continue these attacks. Experts have warned that this could exacerbate tensions in the Middle East.
For now, the US dollar has weakened, adding to gold's gains. The US Dollar Index (DXY), a measure of the greenback against a basket of currencies, fell 0.36% to 100.48, from an opening of 100.97. Also, the index is down 1% so far. Generally, a weaker dollar is good for dollar-denominated commodities because it makes them cheaper for foreign investors to buy.
Now, traders are awaiting the US Personal Consumption Expenditures report due this week and additional speeches from several Federal Reserve officials to gauge the central bank's next move.
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Gold Price Analysis and Forecast Today:
According to gold analysts today, gold prices are on a strong upward trajectory, and their consecutive gains have pushed all technical indicators towards strong overbought levels. There will be no strong selloffs to take profits without a rise in the US dollar and a de-escalation of global geopolitical tensions. Currently, the closest resistance levels for gold are $2670, $2685, and $2710 per ounce, respectively. Decisively, the caution should be exercised against excessive buying from the following peaks.
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