Gold surges past $2500: Is more upside ahead?

Gold prices jumped past $2500 temporarily, in London trading, driven by anticipation of a US Federal reserve rate cut. The market is now pricing in a 45% chance of a 50 basis points cut in September, up from 31% earlier in the week. This shift comes amid signs of a cooling U.S. economy and dovish comments from the San Francisco Fed President.

Political heat: The upcoming U.S. election is also influencing gold's rally. Kamala Harris's edge in the polls suggests continued fiscal stimulus and dovish monetary policy, which boosts gold's appeal. However, a Trump victory could introduce volatility, with his proposed tariffs and potential changes to Fed leadership impacting gold prices in unpredictable ways.

Technical picture: At the time of writing, analysts note that gold is touching highs of $2,515, potentially on the road to unprecedented levels. The daily chart shows a clear bullish bias, with prices surging past $2,500 and remaining well above the 100-day moving average. The RSI is also edging up sharply toward 60, reinforcing the bullish narrative. Buyers might face resistance around $2,518 and $2,520, while support levels are seen at $2,490 and $2,479 in case of a pullback.

Outlook: Market participants are closely watching Friday's Nonfarm Payrolls and wage inflation data, which could further solidify rate cut expectations and push gold even higher.

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