Gold Price Extends Gains, Focus On the Fed As CPE Data Weighs In

Gold price extended its upside on Friday, registering a fourth successive daily gain to trade at $3,431 per ounce at +0.4% on the chart in the New York trading session. The yellow metal has a newfound momentum on the back of rising prospects of US interest cuts by the Federal Reserve, amid a tussle between President Donald Trump and Governor Lisa Cook.

Fed Interest Rate Cut At the Core of XAUUSD Momentum

The Federal Reserve has been slow to slash interest rates, pointing at sticky inflation above its target of 2%. Fed Chairman Jerome Powell was for a long time the one in Trump’s firing line, with the US President accusing the central bank of sabotaging his economic agenda.

However, the last week has seen the President turn his focus on Fed voting member, Cook, whom he has threatened to sack. Cook is fighting back, stating that Trump has no authority to fire her and sued him in a Federal court on Thursday.

Amidst the mounting political pressure, the Fed is expected to cut interest rates in September. This has become more likely after August’s headline Personal Consumption Expenditure (PCE) index reading came out at 2.6%, in line with economists’ expectations.

While that figure is still elevated above the Fed’s target figure, recent jobs data signals a struggling economy and the central bank will find it difficult to justify higher-for-longer rates. According to the CME Fed Watch tool, traders have placed a 85% rate cut likelihood in September. This sits well for gold price, as lower interest rates will exert downward pressure on the US dollar.

Gold Price Prediction

Gold price has its pivot mark at $3,410 and the momentum calls for further upside. The XAUUSD pair will likely meet the first resistance at $3,450. A stronger momentum will break above that level and potentially test the next resistance at $3,480.

On the other hand, action below $3,410 will shift the momentum to the downside. With that, the yellow metal will likely have its first support at $3,380. Action below that level will invalidate the upside narrative. Also, the resulting momentum could push the action lower and potentially test $3,350 in extension.

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