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USD recovers from weak streak while price of gold falls

Gold prices peaked at $2,550 and stabilized around $2,500, influenced by geopolitical factors. The USD index hit its lowest in 2024 due to Federal Reserve rate cut expectations. Future performance of both assets depends on geopolitical events and Fed decisions.

Gold bars
Source: iStock
Picture of Bridgette Laszlo
Bridgette Laszlo
Content Strategist, Chicago

Key points

  • Gold (XAU/USD) fluctuated between $2,100 and $2,550 in the last six months, currently around $2,500
  • The USD index hit its lowest level in 2024, influenced by Fed rate cut expectations
  • Speculation on Fed rate cuts may weaken the dollar further while supporting gold prices
  • Current geopolitical conflicts could bolster gold as a safe-haven asset
  • The future performance of the USD likely depends on forthcoming Federal Reserve rate decisions

XAU/USD remains around $2,500

After reaching an all-time high of $2,550, gold prices have slipped to $2,500. Over the last six months, gold has fluctuated, hitting lows of $2,100. This overall appreciation in gold prices is largely attributed to potential geopolitical factors, making it a favored asset among investors seeking stability in uncertain times.

U.S. dollar regains confidence following its down streak of four days

As rate cut expectations from the Federal Reserve grow, the dollar index has dragged to its lowest level in 2024. Investors are looking forward to Fed Chair Jerome Powell’s Jackson Hole speech on Friday for further insights. This renewed confidence in the USD highlights the complex interplay between monetary policy and currency value.

How does the speculation on Fed rate cuts affect this?

With the possibility of the Fed communicating a dovish stance on rate cuts, the dollar may not recover as strongly. On the other hand, gold might continue to receive support, as it is a non-yielding asset that investors turn to during uncertain financial times.

Where next for gold and USD?

Due to the ongoing conflict between Israel and Hamas, gold has strong potential to maintain its reputation as a safe asset. Investors often seek out gold in times of geopolitical conflict, driving up its price. Meanwhile, the performance of the US dollar will likely depend heavily on the rate cuts determined by the Federal Reserve in 2024 and beyond.

How to trade US dollar

  1. Open an account to get started, or practice on a demo account
  2. Choose your forex trading platform
  3. Open, monitor, and close positions on USD pairs

Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.

You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.

Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.

Reviewed by:
Frank Kaberna
Director of Strategy, Chicago