Expectations of a Fed rate cut and current geopolitics set the stage for gold strengthening

Gold prices hit a record high of $2,589.54 in Asian trading on Monday amid expectations of upcoming Fed policy decisions.

Data released on Friday showed U.S. consumer sentiment rose to 69.0 in September from 67.9 in August amid falling inflation. However, market participants remain cautious amid economic uncertainty.

All eyes will be on the Fed this week as speculation mounts over the changes in monetary policy and future interest rate decisions at its meeting.

Markets are currently pricing in a 52% probability of a 50-bps cut after Wednesday's two-day meeting, according to the CME FedWatch tool. This would be the Fed's first rate cut since 2020.

Zero-yield bullion tends to be a preferred investment amid lower interest rates.

Reports of a second assassination attempt on Republican presidential candidate Donald Trump at his Florida golf club on Sunday renewed demand for safe haven assets.

From the technical point of view, the gold price is forming an uptrend on the D1 timeframe.

In terms of wave analysis, the price is forming the third upward wave on the H4 chart. The breakthrough of the top of the first wave at the level of $2,530 has already occurred, which indicates a possible strengthening of the upward momentum. Bulls Power and Bears Power indicators (standard values), which are in the positive zone, confirm the strength of bullish sentiment and signal further price movement towards buying.

Signal:

The short-term outlook for GOLD is to buy.

The target is at the level of 2720.00.

Part of the profit should be fixed near the level of 2630.00.

The Stop loss could be placed near the level of 2470.00. 

The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.