Gold stands tall near all-time peak amid dovish Fed expectations, bearish USD

• Gold price trades with a mild positive bias and remains close to the all-time peak set on Wednesday.
• Bets for more rate cuts by the Fed keep the USD bulls on the defensive and underpin the commodity.
• Concerns over the US/China economic outlook and geopolitical risks further benefit the XAU/USD.

Gold price (XAU/USD) attracts some buyers for the second straight day on Friday and moves back closer to the all-time peak touched in reaction to the Federal Reserve’s (Fed) oversized interest rate cut earlier this week. Furthermore, the US central bank indicated that more rate cuts were on the horizon, which keeps the US Dollar (USD) bulls on the defensive and continues to act as a tailwind for the non-yielding yellow metal. 

Apart from this, concerns over a slowdown in the United States (US) and China – the world’s two largest economies – and geopolitical risks stemming from conflicts in the Middle East lend additional support to the Gold price. That said, the risk-on rally across the global equity markets holds back bulls from placing fresh bets around the safe-haven XAU/USD and keeps a lid on any meaningful upside during the Asian session. 

Meanwhile, the market reaction to the Bank of Japan (BoJ) policy update was limited and failed to provide any meaningful impetus to the Gold price. Nevertheless, the XAU/USD seems poised to register modest gains for the second successive week and the fundamental backdrop suggests that the path of least resistance is to the upside. Traders now look to a scheduled speech by Philadelphia Fed President Patrick Harker for some impetus. 

Daily Digest Market Movers: Gold price flirts with record high amid bets for more rate cuts by the Fed

• The Federal Reserve’s jumbo rate cut on Wednesday and forecast for another 50 basis points fall in borrowing costs by the end of this year failed to assist the US Dollar to capitalize on the post-FOMC recovery from the YTD low.
• Moreover, Fed policymakers projected rates falling to 3.4% in 2025, down from a prior forecast of 4.1%, and declining to 2.9% in 2026, down from a prior forecast of 3.1%, which revived demand for the Gold price on Thursday.
• The USD bulls seem unimpressed by the upbeat US macro data, showing that Weekly Initial Jobless Claims fell to 219K in the week ending September 14, marking the lowest since May and pointing to a resilient labor market.
• Adding to this, the Philadelphia Fed’s survey revealed that the current general activity index for manufacturing jumped from a seven-month low of -7.0 in August to 1.7 in September, surpassing consensus estimates.
• Meanwhile, the Fed’s oversized rate cut fueled concerns over economic growth, which, along with persistent worries about a slowdown in China, turned out to be another factor that benefited the safe-haven XAU/USD. 
• Furthermore, geopolitical risks stemming from tensions in the Middle East and the Russia-Ukraine war act as a tailwind for the precious metal amid the US political uncertainty ahead of the November presidential election. 
• Apart from this, the fact that several Asian central banks and Russia are buying gold to reduce their reliance on the USD favors bullish traders and supports prospects for a further near-term appreciating move. 

Technical Outlook: Gold price seems poised to challenge ascending channel resistance near $2,613-2,615 area

From a technical perspective, the $2,600 round-figure mark, or the all-time peak set on Wednesday could offer some resistance ahead of the $2,613-2,615 region. The latter represents the top boundary of a short-term ascending trend channel extending from June and should act as a key pivotal point. With oscillators on the daily chart holding comfortably in positive territory and still far from being in the overbought zone, a sustained strength beyond the said barrier will be seen as a fresh trigger for bulls and pave the way for a further near-term appreciating move for the Gold price.

On the flip side, the $2,551-2,550 area now seems to protect the immediate downside ahead of the $2,532-2,530 horizontal resistance breakpoint. Some follow-through selling might expose the $2,500 psychological mark, below which Gold price could accelerate the slide towards the $2,476 confluence – comprising the 50-day Simple Moving Average (SMA) and the lower boundary of the channel. A convincing break below will suggest that the XAU/USD has topped out in the near term, setting the stage for a slide to the 100-day SMA, around the $2,412 region, en route to the $2,400 mark.