Gold prices remained relatively unchanged on Tuesday, trading just above the $2,500 mark. Investors are closely monitoring the Federal Reserve’s (Fed) monetary policy stance, as recent economic data has cast doubt on expectations for a significant rate cut at the upcoming meeting.
The mixed US jobs report released last week challenged market predictions of a 0.50% rate cut in September. While the headline unemployment rate declined, wage growth accelerated, indicating a stronger-than-anticipated labor market. This has led to a decrease in market-based probabilities for a more aggressive rate cut.
Gold’s Future Hinges on US Inflation and Geopolitical Risks
As investors await the release of US Consumer Price Index (CPI) and Producer Price Index (PPI) data this week, the outlook for interest rates remains uncertain. While some analysts believe that inflation data may have a limited impact on policy expectations, others argue that employment data is currently the more crucial factor.
Geopolitical tensions continue to support gold’s safe-haven appeal. The escalating conflict in Gaza and ongoing tensions in Ukraine have contributed to increased demand for the precious metal.
Technical Analysis: Gold Consolidates in Mid-Range
Gold prices are currently trading within a sideways range between the all-time high of $2,531 and a support level around $2,475. A decisive break above or below this range could signal a new trend.
The longer-term outlook for gold remains bullish, with a potential upside target of $2,550. However, a break below the support level of $2,460 could indicate a potential downtrend.
