Gold price remains stable above USD 2,500 while dollar risk looms

Gold remained safely above the $2,500 mark at the start of trading on Thursday, rising more than 13 points on the charts. The XAU/USD index shows that the price of gold reached $2,500.2,518 today, which represents an increase of 0.53% in the indices. While gold prices are rising, the US dollar remains on the brink and is trading at the 100.99 mark.

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Gold price rises despite US dollar problems

The US dollar is set to rise above 101 but is being dragged down by the pessimistic forces. Institutional investors are opening positions in gold as the metal looks promising and is currently outperforming the US dollar. The next few weeks could be difficult for the key currency as investments from global investors dry up.

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Development of the DXY index

The DXY index, which tracks the performance of the US dollar, started to fall from 106.20 to 100.9 in two months. There are fears that a drop below the 100-point mark could cause the currency to trade below the leading local currencies. The development increases the pressure on the USD, while gold remains in the upside zone.

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Commodity markets: What’s next for gold and the US dollar?

Speculations about a Fed rate cut are weighing on the US dollar. The upcoming Fed meeting will determine the USD outlook as traders expect a rate cut. Therefore, the currency markets may see volatility in September, clouding the USD outlook.

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On the other hand, gold could reach $2,600 by the end of the year, predicted leading investment bank JP Morgan. The predicted price increase comes after central banks of developing countries are stockpiling the precious metal. “Overall, the strong level of gold purchases by central banks and the sustained rise in the gold price since the end of the first quarter give us reason to think about the price sensitivity of central banks’ demand,” Read the forecast.