Gold Rally Intensifies Amid Fed Cut Bets and USD Weakness: New Highs on the Horizon?

Key Points:

• Gold Hits Record Highs: Gold continues to surge, hitting a new all-time high of $3,668 per ounce.
• Fed Rate Cut Bets and USD Weakness: Growing expectations of a rate cut by the Federal Reserve, combined with a weakening US Dollar, are fueling the bullish momentum.
• Overbought Conditions Raise Concerns: The RSI reading above 80 indicates overbought conditions, hinting at potential corrections.
• Support and Resistance Levels to Watch: Bulls eyeing $3,700-$3,750, while a break below $3,630-$3,620 may pause the bullish trend.

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Gold Surge: A Combination of Safe-Haven Demand and Fed Expectations

The price of gold continues to set new records, driven by increasing safe-haven demand and expectations of a Federal Reserve rate cut. As the US Dollar Index plunges to 97 and concerns about rising unemployment and a slowing economy grow, gold has surged to $3,668, marking a new all-time high.

With central banks ramping up gold reserves and the US economy grappling with worsening labor markets, it’s no wonder that investors are flocking to gold as a store of value. The expectation of Fed rate cuts—expected at the September 17 meeting—is contributing to further upward pressure on gold, with analysts forecasting potential gains to $3,700-$3,750.

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Overbought Conditions: Will Gold Correct?

Despite the bullish momentum, gold’s RSI is currently above 80, signaling that the precious metal may be entering overbought territory. While the trend remains strong, investors should be cautious of potential profit-taking and corrections.

Key support levels to watch are $3,630-$3,620, which could act as a temporary floor. A breach below this range may trigger a correction, pulling gold towards $3,585-$3,575. If this zone doesn’t hold, the retracement could extend towards $3,545-$3,525.

On the upside, gold’s immediate resistance sits at $3,668, and any consolidation above this level could pave the way for further upside toward the $3,683-$3,688 range. Major resistance is expected around $3,703-$3,713.

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Looking Ahead: Geopolitical Tensions and Economic Data to Keep Gold Bullish

While the technical chart suggests potential corrections, the overarching bullish sentiment for gold remains intact. Factors such as the Fed’s interest rate decisions, geopolitical instability, and the fragile global economy all continue to support the upward momentum for gold.

As we await the release of key inflation data and the Federal Reserve’s decisions, gold’s safe-haven appeal will likely keep it in the spotlight. However, traders should stay vigilant as short-term corrections are likely, and careful monitoring of the support zones could offer lucrative buying opportunities.

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Conclusion:
Gold’s momentum remains strong, but caution is advised as the market enters overbought territory. With the Fed expected to cut rates and geopolitical uncertainties continuing, gold could extend its rally towards $3,700-$3,750, but it’s essential to watch key support levels for any signs of correction.

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