Gold rises to the highest level in two weeks amid political turmoil and expectations of interest rate cuts

Gold prices jumped to their highest levels in two weeks during trading on Tuesday, exceeding the barrier of 3380 dollars per ounce, amid a wave of political uncertainty that shook investor confidence after an unprecedented major decision from Trump.

Gold retreated as we expected it to be just a correction only in order to complete the ascent as we mentioned yesterday here

Gold fell at the beginning of the week - is it considered a buying opportunity?

This rise came as a reaction to the announcement by former US President Donald Trump via social media on Monday of the dismissal of a member of the board of governors of the Federal Reserve Lisa Cook.

In the reasoning for his decision, Trump referred to allegations related to mortgage fraud.

This decision raised widespread concerns in financial circles about the independence of the US central bank (the Federal Reserve) and its immunity from political volatility, which pushed investors towards the traditional safe haven of gold.

Mixed economic outlook and liquidity outlook

This political development comes at a time when the market is looking with concentration to future signals of monetary policy.

Federal Reserve Chairman Jerome Powell hinted last Friday at the possibility of cutting interest rates at the September meeting, highlighting the escalating risks facing the labor market.

However, Powell remained cautious, noting that the inflation phenomenon remains a threat and no final decision has yet been made.

All eyes will be on Friday's PCE price index (PCE), the Fed's preferred inflation gauge, for more clues on the course of US monetary policy.

Market forecast: interest rate cut

almost certain Financial markets are currently absorbing these conflicting signals, as estimates of transactions in interest rate futures indicate an 83% probability of a 25 basis point rate cut next month.

Any reduction in interest rates is a support for the prices of non-yielding gold, which makes it more attractive compared to fixed-yield assets.