Expectations of Fed policy easing support gold market

Gold set a new all-time high amid expectations of monetary policy easing by the Federal Reserve (Fed) and rising geopolitical tensions in the Middle East. Gold prices rose by 1.1%, surpassing the April record of $2,440 per ounce at the start of Asian trading.

Traders have stepped up bets on a reduction in the Fed's borrowing costs as early as September. This supports gold prices, which does not generate interest income. In addition, the crash of a helicopter with Iranian President Ebrahim Raisi on board intensified geopolitical risks in the region. Prior to that, an oil tanker bound for China was hit by a missile from the Houthis in the Red Sea.

Today, investors are focused on speeches by Fed officials Bostic, Barr, Waller, Jefferson and Mester. Their statements may provide insight into the future path of monetary policy. A cautious approach or aggressive comments from Fed members may limit the upside potential for gold prices.

This week will also see the release of the minutes of the latest U.S. central bank meeting.

According to the CME FedWatch tool, market participants estimated the probability of a rate cut in June at 10% and in September at almost 80%.

At the technical level, gold quotes on the D1 chart demonstrate the formation of an upward trend. 

Within the wave analysis, the price is in the process of forming the third ascending wave on the H4 timeframe. The breakthrough of the top of the first wave at the level of 2431.50 has already taken place. This indicates a potential strengthening of the upward momentum. Bulls Power indicator volumes (standard values) are in the positive zone, which indicates the potential for growth.

Signal:

The short-term outlook for Gold is to buy.

The target is at the level of 2650.00.

Part of the profit should be taken near the level of 2530.00.

A stop-loss could be placed at the level of 2300.00.

The bullish trend is short-term, so trade volume should not exceed 2% of your balance.