• News outlets reported that a 50 bps Fed rate cut next week was a close call.

• Gold traders cheered the likelihood of an aggressive policy easing.

• The likelihood of a 50 bps September Fed rate cut increased to 45%.

The gold price analysis indicates a sudden surge in bullish momentum as the yellow metal benefits from increased bets for a massive Fed rate cut. Gold rallied to an all-time high after reports that the US central bank might be ready to lower rates by 50 bps.

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On Thursday, news outlets reported that a 50 bps Fed rate cut next week was a close call. At the same time, former Fed policymaker Bill Dudley said there was a strong case for a super-sized rate cut. Consequently, gold traders cheered the likelihood of an aggressive policy easing. Lower borrowing costs increase the appeal of non-yielding gold.

The increase in Fed rate cut expectations came a day after US consumer inflation showed that price pressures increased more than expected. Consequently, investors had expected a slow start to policy easing. As a result, the dollar rose, making gold more expensive.

Furthermore, wholesale inflation beat forecasts, relieving pressure on the Fed to cut interest rates. However, the change late on Thursday increased the likelihood of a 50 bps rate cut to 45%. This creates more uncertainty about the FOMC meeting, as anything could happen. A smaller cut will likely disappoint investors after the recent surge in bets. Consequently, gold prices could pull back. On the other hand, a 50 bps rate cut might have little impact on gold if traders have already priced in such an outcome.

Gold key events today

There won’t be any high impact events to cause high volatility for gold. Therefore, traders will keep pricing in a more significant US rate cut.

Gold technical price analysis: Bullish momentum pushes price out of consolidation

On the technical side, gold has broken out of consolidation to make new highs. The price has rallied above the 30-SMA and is approaching the 2580.46 key level. The bullish bias is strong since the price sits far above the SMA, and the RSI is in the overbought region.

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Gold was trapped between the 2480.38 support and the 2520.09 resistance for a long time. However, a sudden surge in momentum allowed bulls to continue the previous bullish trend. After such a steep move, the price might retreat to the SMA before continuing higher.

https://www.forexcrunch.com/blog/2024/09/13/gold-price-analysis-eying-2600-amid-probable-50-bps-cut/