Expectations of Fed rate cut strengthen bullish momentum in gold prices

On Monday, gold prices declined slightly and held near the key level of $2,500 after investors started locking in profits. This happened after reaching a record high in the previous trading session.

At the end of last week, gold prices reached an all-time high of $2,509.74. This was due to expectations of monetary policy easing by the Federal Reserve System (Fed), rising geopolitical tensions, and active purchases by central banks. These factors have led to an over 20% increase in gold prices since the beginning of the year.

The US retail sales data release and moderate inflation have strengthened expectations of rate cuts by the Fed. According to CME FedWatch, there is a 75.5% chance of a 25-basis-point rate cut at the next meeting.

Investors are now awaiting Fed Chair Jerome Powell's keynote address in Jackson Hole, scheduled for Friday. This speech could give a clearer picture of the regulator's future course of action. Also, the minutes of the July FOMC meeting will be released on Wednesday, which may provide more signals to the market.

Meanwhile, several Chinese banks have received new gold import quotas from the NBOC, expecting the demand to revive despite record high prices.

At the technical level, gold prices went beyond the corrective rectangle channel on the H4 chart. In terms of wave analysis, the price is forming the third ascending wave. The breakthrough of the first wave top at the level of 2484.00 has already occurred. This indicates a potential strengthening of the upward momentum. Bulls Power and Bears Power indicators (standard values) are in the positive zone, confirming the strength of the bullish sentiment and the formation of the movement towards buying.

Signal:

The short-term outlook for GOLD suggests buying. 

The target is at the level of 2590.00.

Part of the profit should be fixed near the level of 2550.00.

A stop-loss could be placed at the level of 2420.00.

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