On September 19th, the price of spot gold surged by more than 1%, reaching close to $2,595 per ounce. This increase was influenced by the Federal Reserve's interest rate cuts and heightened tensions in the Middle East. The Federal Reserve announced a 50-basis-point reduction in the benchmark interest rate, entering an easing cycle, while the dollar weakened further due to the expected rate cut, pushing gold prices up. The dollar index fell 0.3% to 100.64 points that day.
Additionally, senior U.S. officials acknowledged that the Biden administration is finding it difficult to achieve a ceasefire agreement in Gaza within its term, with this geopolitical risk also supporting the gold prices. Analysts suggest that gold prices still have room to rise in the short term, potentially challenging the psychological barriers at $2,650 and $2,700.
UBS analysis indicates that the demand for gold ETFs will accelerate, with expectations that gold prices could reach $2,700 per ounce by 2025. Market analysts believe that the current global low-interest-rate environment and a weak dollar will continue to enhance gold's appeal as a safe-haven asset.
Regarding the Middle East situation, The Wall Street Journal reported that U.S. officials have privately acknowledged that a ceasefire agreement in Gaza is unlikely, especially before the end of President Biden's term. As conflicts between Lebanon and Israel escalate, the situation further deteriorates, with both Hezbollah and Hamas intensifying their opposition to Israel. Recent explosions in Lebanon have caused significant casualties and have been blamed on Israel by Hezbollah.
Technical analysis of gold prices shows that they remain in an upward trend, with market buyers in a dominant position. Analysts state that if gold prices strengthen further, they may break through the key resistance levels of $2,650 and even $2,700. However, if they fall below the support level of $2,556 per ounce, they may further decline to $2,531 per ounce.
