Gold Rallies Amid Renewed Fed Rate Cut Debate

: George Solotarov; 13 September 2024; Hits: 86

Gold Rallies Amid Renewed Fed Rate Cut Debate

Gold prices are trading at new record highs, surpassing the previous record of $2,531. The rally was fueled by the release of mixed US inflation data and renewed debate over the Federal Reserve's (Fed) potential rate cut.

US Inflation Data

The release of US Producer Price Index (PPI) data showed a deeper-than-expected slowdown in headline PPI, while core PPI remained sticky. This mixed data led to a weaker US Dollar (USD) and boosted gold prices.

Fed Rate Cut Debate

An article in The Wall Street Journal and comments from former New York Fed President William Dudley have reignited the debate over whether the Fed will cut interest rates by 0.50% or 0.25% at its upcoming meeting. This has led to a fall in US Treasury yields and a rally in gold.

USD Technical Analysis

Gold's bullish trend has been strengthened by the breakout above its multi-week sideways range. The next potential target is $2,590. However, the Relative Strength Index (RSI) suggests that the market may be overbought, increasing the risk of a short-term pullback.