During Thursday’s Asian session, gold (XAU/USD) fell, signalling an end to its recent surge that sent prices to new all-time highs of about $4,060. Following reports of a peace deal between Israel and Hamas, the demand for conventional safe-haven assets declined.
Following gold’s robust multi-day rise, investors were encouraged to lock in profits by the agreement, which was seen as a possible step toward regional stability. Nonetheless, the commodity continues to receive underlying support from a number of market factors.
Market participants are pricing in two possible rate cuts by year’s end, reflecting the high expectations for more. This opinion was supported by the Fed’s September meeting minutes, which indicated widespread support for additional policy easing in the face of inflation and labor market worries.
However, the prolonged US government shutdown has made the macroeconomic outlook more uncertain, which has limited the dollar’s ability to sustain its recent gains. Gold usually gains when the dollar weakens, so this dynamic might keep giving it a buffer.
Technically speaking, gold is still strong above $4,000. Bullish sentiment could be maintained by holding this area; a break below could reveal the $3,950 support area.
In order to ascertain gold’s next course, traders are currently awaiting remarks from Fed Chair Jerome Powell regarding monetary policy.
