Tuesday morning, September 9th, gold continued its surge, setting a new ATH at $3,654/ounce, with the bullish momentum still holding impressively.
The reason for this sharp and powerful rally comes from expectations of a rate cut by the Fed in September, which has now reached 100% probability: 89.4% of investors expect a 25bps cut, while the remaining 10.6% expect a 50bps cut. With the Fed almost certain to cut rates, this partly reflects the pressure from Donald Trump on both the market and the Fed, raising concerns that Trump could undermine the Fed’s independence and intervene directly in monetary policy.
In addition, the lingering impact of the Nonfarm Payrolls data released last Friday night shows that this may not yet be the end—at least until some positive signals emerge for the US dollar. The greenback has fallen back to a 7-week low, effectively erasing nearly all economic recovery momentum since the start of the year, following record-low Nonfarm numbers.
At present, the market is turning its focus to the CPI data, scheduled for release this Thursday evening.
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If CPI data shows positivity for the dollar, gold could sharply correct back below $3,600.
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But if CPI continues to reflect USD weakness, gold may surge to $3,700/ounce even before the Fed’s rate decision is announced.
Technical Analysis:
With gold’s current bullish momentum, we will look for a pullback and plan to BUY around the $3,600 support zone, or at least when gold touches the EMA50 line. The target for this BUY setup is the $3,653–$3,680/ounce range.
Trí Hùng
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