Gold Price Forecast: XAU/USD holds positive ground above $2,550, focus on Fed rate decision

• Gold price trades in positive territory near $2,580 in Monday's early Asian session. 
• Firmer Fed rate cut expectations and persistent geopolitical risks continue to underpin Gold price. 
• Slow momentum in Chinese economic activity might weigh on the precious metal. 

Gold price (XAU/USD) gains momentum around $2,580 during the early Asian session on Monday. The precious metal reached a fresh all-time high at $2,586 on Friday amid rising expectations of a significant Federal Reserve (Fed) rate cut. The Federal Open Market Committee (FOMC) meeting on Wednesday will be in the spotlight.

The growing speculation of an interest rate cut by the Fed after US economic data signaled a slowing of the economy has boosted the yellow metal as lower interest rates reduce the opportunity cost of holding non-yielding Gold. Financial markets are now pricing in a 48% chance of a 25 basis points (bps ) US rate cut at its upcoming meeting on September 17-18, while the odds of a 50 bps cut stand at 52%, according to the CME FedWatch tool. 

"We are headed towards a lower interest rate environment, so gold is becoming a lot more attractive... I think we could potentially have a lot more frequent cuts as opposed to a bigger magnitude," said Alex Ebkarian, chief operating officer at Allegiance Gold. 

Additionally, the ongoing geopolitical tensions in the Middle East provide further support to the safe-haven Gold price. Israeli Prime Minister Benjamin Netanyahu said on Sunday that Yemen's Houthis will pay a "heavy price" after a missile fired by the group landed in central Israel, per the BBC. 

Nonetheless, the sluggish economy and the concerns about the economic slowdown in China might cap the upside for precious metals as China is the world's biggest producer and consumer. The Chinese Retail Sales and Industrial Production were weaker than the expectation in August. Industrial output grew at the slowest pace since March, while Retail Sales had their second-slowest month of the year.