Gold: Gold price exceeds $2,600

The gold ounce could continue to rise, but the evolution of macro and geopolitical tensions will be decisive.

Gold Price Benefits from Fed Pivot and Rising Geopolitical Tensions

Gold prices continued to rally last week, surging above $2,600 for the first time in history on growing expectations of Fed rate cuts and geopolitical tensions in the Middle East.

The Fed on Wednesday made its first rate cut since early 2020, cutting 50 basis points, and Fed officials have signaled they anticipate another 50 basis points of rate cuts by year-end and 100 basis points next year.

At the same time, gold’s safe haven status has been bolstered by escalating tensions in the Middle East. Israel is building up its troops toward the Lebanese border after carrying out major airstrikes on Lebanese territory in recent days, raising fears of a wider conflict.

The evolution of geopolitical tensions and expectations of rate cuts will continue to play a crucial role for the gold price. Expectations of rate cuts will evolve according to the upcoming US economic data, in particular inflation and unemployment figures. Disappointing US economic figures would increase fears of recession, and therefore pressure on the Fed to lower rates, which should support the gold price and vice versa.

Gold Price Weekly Chart – Key Levels

Technical analysis of the gold price

Gold Price Could Continue to Rise to $3,000

From a technical analysis perspective, the gold price trend has been undeniably bullish since last year. The gold ounce is about to reach the target of the long-term range from which it broke out at the beginning of the year.

The price of gold continues to trend well and could therefore reach the symbolic threshold of $3,000 in the coming months, unless tensions in the Middle East ease and/or the global economy picks up speed (which would reduce the intentions of central banks to reduce their rates).

That said, it is important to note the extreme long positioning of large speculators on the gold price according to the latest CFTC data. It is therefore unlikely that the gold price will soar from current levels without a macro catalyst.