Gold (XAU/USD) surged to an unprecedented all-time high of $2,482 during Wednesday’s Asian session, propelled by growing expectations of a September rate cut by the Federal Reserve (Fed) and a surge in buying activity on the Shanghai Futures Exchange (SHFE).
Market Drivers and Outlook
Fed Governor Adriana Kugler’s recent remarks, suggesting a potential rate cut later this year, further cemented market expectations of a September easing cycle. This comes on the heels of Fed Chair Jerome Powell’s earlier comments highlighting progress on inflation and hinting at a potential policy shift.
The CME FedWatch tool now reflects a 100% probability of at least a 0.25% rate cut in September, up from just above 60% last week. This change in outlook is primarily driven by softer-than-expected US inflation data, including the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) figures.
Adding to Gold’s bullish momentum is a resurgence in buying activity on the SHFE. According to TD Securities, discretionary traders are piling back into both Comex and SHFE gold, potentially driven by a “Trump trade” narrative alongside Fed rate cut expectations.
Gold Technical Analysis: Range Breakout Confirms Bullish Momentum
Gold’s decisive break above its previous all-time high of $2,451 confirms the end of the sideways consolidation phase and marks the resumption of the broader uptrend. The next upside target for gold is $2,555, as calculated by the 0.618 Fibonacci extension of the previous range.
Key Points:
- Gold hits new all-time highs on Fed rate cut expectations and Shanghai buying frenzy.
- Fed officials’ comments and softer US inflation data solidify rate cut bets.
- SHFE traders are aggressively accumulating gold, further fueling the rally.
- Technical analysis confirms a breakout from the previous range, with further upside potential.