The price of gold (XAU/USD) surged to $2,505 in early Asian trading on Monday as market participants anticipate potential rate cuts by the US Federal Reserve in September. Investors are closely monitoring key events this week, including the release of the US S&P Global Purchasing Managers Index (PMI) and Federal Reserve Chair Jerome Powell’s upcoming speech.
On Friday, gold hit an all-time high as market sentiment favored bets on upcoming interest rate cuts by the Fed. Despite positive Retail Sales figures, recent data on US Producer and Consumer Price Indexes suggested a moderation in inflation. Notably, US Housing Starts plummeted by 6.8% in July to 1.238 million units, the lowest level since 2020, further fueling expectations for Fed intervention.
Federal Reserve Bank of Chicago President Austan Goolsbee’s remarks on Sunday downplayed concerns of an overheating US economy, advocating for cautious policy adjustments. Market expectations now reflect a 76% probability of a 25 basis points Fed rate cut at the September meeting, according to the CME FedWatch Tool.
In addition to economic indicators, geopolitical tensions are also shaping gold’s trajectory. Ongoing conflicts in the Middle East and Ukraine are amplifying safe-haven demand for the precious metal. Recent escalation between Hezbollah and Israel, despite diplomatic efforts, has intensified concerns. An Israeli strike over the weekend reportedly resulted in significant civilian casualties, underscoring the volatile geopolitical backdrop driving gold’s appeal as a hedge against uncertainty.
