- As the dollar weakens, gold’s rally shows no signs of slowing down.
- Investors are watching the Fed’s rate decision, which could be a major catalyst for higher gold prices.
- Gold ETFs are gaining traction, but there’s still room for more investment growth in the coming months.
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Gold's rally could continue higher as the US dollar weakens amid an improving macroeconomic landscape that's looking ideal for the yellow metal.
What’s driving this bull market isn’t just today’s expected rate cut by Fed (likely 50 bps), but the broader easing cycle that could last for months.
Major banks and financial institutions predict gold’s upward trend will continue, especially if retail investors join central banks and institutional investors in boosting demand.
Although gold ETFs have seen moderate inflows so far, there’s plenty of room for increased investment.
The Fed’s Role in Gold’s Bull Market
While inflation hasn’t been the key driver behind gold’s recent performance, expectations around US interest rates are fueling demand.
Each rate cut strengthens gold, and with the US just entering its easing cycle, we could see higher gold prices in the coming quarters.
A 50 bps cut would be a boon for gold, pressuring the dollar and increasing market anxiety about the US economy.
Investors often turn to gold during economic slowdowns or recessions, and history shows that in six of the past eight US recessions, gold posted solid gains. Right now, the market is betting on a soft landing for the economy—no recession, but still a path to lower inflation.
Growth Potential in Gold ETFs
Gold ETFs offer an easy way for retail investors to get exposure without the hassle of owning physical gold.
The World Gold Council reports moderate growth, with ETFs increasing their holdings by $2.1 billion, marking four straight months of positive inflows. In total, ETFs now hold 3,182 tons of gold, adding 29 tons recently.
However, year-to-date data shows a net loss of 44 tons in gold holdings, suggesting plenty of potential for continued growth.
Potential Correction a Buying Opportunity
Gold’s price continues its upward march, though momentum has slowed after reaching historical highs around $2,600 per ounce. A correction could open up a great buying opportunity.
The first level for sellers to watch is around $2,570, where an upward trendline meets support. If this breaks, eyes will shift to $2,510. With today’s Fed decision, market volatility could spike, which might set the tone for gold’s next move.
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Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk is at the investor's own risk. We also do not provide any investment advisory services. We will never contact you to offer investment or advisory services.