• Gold hit a recent all-time high of $2,586 on rising expectations for a significant interest rate cut by the Federal Reserve, with a 43% chance of a 50 basis point cut.
• Yields on US Treasury bonds are falling, the US dollar index is falling to 101.09, which supports the growth of gold prices.
• Global ETFs see robust inflows as improving US consumer sentiment and lower inflation expectations fuel speculation about further Fed easing.

Gold prices have surged to a recent all-time high (ATH) of $2,586 and are set to continue their gains as the U.S. dollar weakens on Friday. Expectations of a larger interest rate cut by the Federal Reserve (Fed) have boosted the non-yielding metal, with talk that it could hit the $3,000 milestone. At the time of writing, XAU/USD is trading at $2,582, up almost 1%.

Traders have increased the odds of a 50 basis point (bps) rate cut by the Fed, according to data from the CME FedWatch Tool. A news article by Fed watcher Nick Timiraous in The Wall Street Journal, along with comments from former New York Fed President William Dudley, prompted a jump from 27% to 43%, while estimates of a 25 bps cut fell from 73% to 57%.

As a result, US Treasury yields fell and weakened the dollar. The US Dollar Index (DXY), which measures the dollar’s performance against six other currencies, fell 0.15% to 101.09.

Gold bar prices are expected to continue to rise as global gold ETFs saw a fourth consecutive month of inflows in August, according to data from the World Gold Council last week.

On Friday, the U.S. economic calendar released the University of Michigan Consumer Sentiment Index for September. The index showed an improvement from August. At the same time, inflation expectations fell, fueling speculation that the Fed will cut interest rates.

Daily Market Movement Review: Gold Price Rises Sharply Above $2,550

• The University of Michigan’s consumer sentiment index rose to 69.0 from 67.9, beating estimates of 68.
• Inflation expectations rose from 2.8% to 2.7% year-on-year, while longer-term expectations rose from 3% to 3.1%.
• The greenback remained under pressure after the U.S. Bureau of Labor Statistics released mixed PPI data for August. Meanwhile, the number of Americans filing for unemployment benefits rose in line with expectations, topping the previous week’s reading.
• Data from the Chicago Board of Trade indicate the Fed will cut interest rates by at least 98 basis points this year, down from 108 a day earlier, according to the December 2024 federal funds rate futures contract.

Technical Outlook: Gold Price Rising, Buyers Expect $2,600

The bullish trend in gold prices remains intact, supported by solid demand and momentum. The Relative Strength Index (RSI) is bullish and, given the strength of the trend, remains timid about reaching 80, which traders typically consider the “most extreme” overbought level.

With that in mind, the path of least resistance for XAU/USD is up. The first resistance is the September 13 high at $2,586. Once broken, the next stop will be $2,600.

On the other hand, gold sellers need to push prices below $2,550 if they want to regain control. The following key support levels that need to be broken are the August 20 high at $2,531 before reaching $2,500.