(Kitco News) – The expected September rate cut from the Federal Reserve and presidential candidate Donald Trump's support for lower rates and tariffs are combining to boost demand for gold, according to Arslan Ali, currency and commodity analyst at FX Empire.

Spot gold hit an intraday high of $2,475 per ounce during overnight trading, with experts pointing to rate cut expectations as the key driver for the yellow metal’s renewed strength. Market forecasts are now predicting a 93-98% likelihood of a rate cut in September.

“Lower interest rates typically make non-yielding assets like gold more attractive to investors,” Ali wrote. “Additionally, former President Donald Trump’s advocacy for tax reductions, lower interest rates, and increased tariffs have further supported gold prices. This policy stance is seen as potentially inflationary and could weaken the dollar, making gold a more appealing safe-haven asset.”

However, despite these favorable factors, the strength of the U.S. dollar is restraining gold’s momentum. “US Retail Sales for June remained steady at $704.3 billion, indicating consistent consumer spending,” Ali noted. “Despite a stronger dollar, this stability, coupled with the Fed’s cautious stance on rate cuts, has contributed to Gold’s recent price increase. Investors are turning to gold as a hedge against uncertainties surrounding future Fed actions and economic growth prospects.”

Trump’s proposed economic policies are having an impact on gold prices. During a meeting with House Republicans, the former president endorsed tax cuts, lower interest rates, and increased tariffs. “These policies could spur inflation and weaken the US dollar, boosting demand for gold,” Ali said.

Turning to the technical picture, Ali said the 4-hour chart “indicates a bullish trend, with the price trading above both the 50-day and 200-day exponential moving averages (EMAs) of $2440.26 and $2388.10, respectively.”

“A key level to watch is the pivot point at $2462.54,” he noted. “If gold can maintain this level, it could propel prices towards the immediate resistance of $2484.03, followed by $2495.38 and $2508.05.”

Ali cautioned that a break below $2462.54 “could trigger a selloff towards support levels of $2451.33, $2434.87, and $2420.02.”

Spot gold briefly dipped below the $2,460 level to a session low of $2,456.28 per ounce at noon EDT. It has since recovered slightly to trade at $2460.81 at the time of writing for a gain of 0.08% on the daily chart.

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