What the Fed rate cut decision mean for GLD ETF flows

Gold price was little changed in early Monday session as investors await the Fed’s interest rate decision in the new week. Even with the sideways trading, the bullish momentum remains steady with the previously evasive level of $3,600 offering strong support. 

Amid this steady uptrend, GLD gold ETF recorded its fourth consecutive weekly gain in the just concluded week. The gold derivative remains close to its all-time high as it tops the list of ETFs with high inflows. In addition to the Fed’s rate decision, financial markets will also be eyeing rate decisions from Japan. Norway, Canada, and the United Kingdom central banks. 

GLD ETF Flows Surge with Fed Rate Cut Decision in Focus

September’s Fed interest rate decision is slated for Wednesday with investors betting that the central bank will lower borrowing rates by 0.25%. While that is priced in, the Fed may fail to offer a clear signal on the timeline of subsequent rate cuts. While the non-yielding bullion is set to continue benefiting from the broader uncertainties, it tends to perform better in an environment of lower interest rates. 

Meanwhile, a rise in the US dollar and the profit-taking mood in the gold market will likely curb GLD gold ETF gains in the immediate term. 

Nonetheless, the bullish momentum is set to continue with the GLD gold ETF finding support in the steady inflows. According to the World Gold Council, gold ETFs marked their third consecutive month of inflows in August with the GLD ETF topping the list. 

Continued strength in the demand for these derivatives is expected amid the persistent market uncertainties and expectations of a dovish Fed. Even with the possible pullback in gold price, investors appear keen on insuring their resources against trade risks by steadily build on their safe-haven allocations.

Besides, the US dollar remains under selling pressure despite the subtle gains recorded at the start of the week. A weaker greenback makes gold and other dollar-priced assets less expensive for buyers holding foreign currencies. 

GLD gold price technical outlook

GLD gold ETF, which tracks the performance of the bullion, recorded its fourth straight week of gains in the just concluded week, as it steadies close to the fresh all-time high hit earlier in the week. This is after gold price hit and surpassed $3,600 an ounce for the first time ever. The gold ETF has rallied by about 37% year-to-date, topping the previously evasive zone of $330. At the time of writing, the derivative was trading at $335.42.

A look at its daily price chart shows a steady bullish momentum as it continues to trade above the 25 and 50-day EMAs. Notably, at an RSI of 76, a corrective pullback is likely investors take profit. However, the movements may be subtle in the ensuing sessions as the market await the Fed’s rate cut decision in the new week.

In the immediate term, the range between the all-time high at $338.41 and the crucial support zone of $330 will be worth watching. Even with a further pullback, $325 will likely offer steady support as the bulls remain in control. On the upside, further rallying would yield a fresh all-time high with buyers eyeing $340.