- Gold prices surged past $2,450 driven by growing expectations that the U.S. Federal Reserve will begin an easing cycle in September.
- The potential election of former President Donald Trump could be contributing to the upward pressure on gold.
Gold price cleared the May 20 high of $2450 on Tuesday, as expectations intensify that the U.S. Federal Reserve will commence an easing cycle in September. Fed Chair Jerome Powell addressed the Economic Club of Washington this week, noting the economy’s solid performance and signaling potential rate cuts once inflation trends towards the 2% target.
The CME FedWatch Tool indicates near-certain odds of a 25-basis point rate cut in September, with many forecasting a total of 50 basis points in cuts through 2024. But one has to question the accuracy of these optimistic predictions. The next FOMC meeting is in 14 days.
Potentially adding to the upward momentum on gold is the re-election of former President Donald Trump in November. Trump’s proposed policies, including tariff hikes and tax cuts, are anticipated to increase the U.S. budget deficit and spur inflationary pressures.
Bullish momentum in gold appears intact, supported by the Relative Strength Index (RSI) on the daily chart. Although it is trending higher and approaching typical overbought conditions.
