Gold (XAU) Daily Forecast: Steady at $1,234; Potential Uptrend Ahead?

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Published: Apr 29, 2024, 07:17 GMT+00:00

Key Points:

Gold's Stability Ahead of Fed Meeting: Prices steady at $1,234, investors eye Federal Reserve's next moves.
Gold Reacts to U.S. Monetary Policy: High U.S. interest rates prompt reevaluation of gold investments.
Influence of Market Dynamics on Gold: Positive equities and geopolitical risks impact gold's price trajectory.

Gold (XAU) Daily Forecast: Steady at $1,234; Potential Uptrend Ahead?

Market Overview

Gold prices have shown little movement in Asian trading on Monday, remaining steady at $1,234 per ounce, as market participants adjust their positions ahead of the upcoming Federal Reserve meeting.

After reaching highs earlier in April, the yellow metal has retreated, influenced by a reduced demand for safe havens and the expectation of sustained higher U.S. interest rates.

Impact of U.S. Monetary Policy on Gold

Recent U.S. economic data, including a hotter-than-expected PCE price index reading at 0.3% monthly and 2.7% annually for March, has solidified the belief that the U.S. Federal Reserve may maintain higher interest rates for an extended period.

With rate cuts now potentially postponed to September or even later, the opportunity cost of holding non-yielding assets like gold increases.

Despite recent declines, gold prices are still up year-over-year, buoyed by concerns that prolonged high interest rates could dampen global economic growth.

Market Dynamics and External Factors

As of the last trading session, XAU/USD struggled to build on its modest gains from the previous days, with prices slightly lower at the start of the week. The broader market sentiment, influenced by positive equity performance and ongoing geopolitical risks like the Russia-Ukraine conflict, continues to sway gold prices.

Moreover, fluctuations in the U.S. dollar, which saw a sharp recovery against the Japanese Yen and a retreat from two-week lows, have impacted gold as it inversely correlates with the strength of the dollar.

Upcoming Economic Events and Their Potential Impact

Investors are now looking towards key economic indicators scheduled for release, including the U.S. Nonfarm Payrolls (NFP) report, expected to show a job addition of 210,000 for April.

These events, coupled with the Federal Open Market Committee (FOMC) meeting starting Tuesday, are expected to provide further clarity on the economic landscape and potentially influence gold prices.

Investors are now looking towards key economic indicators scheduled for release, including the U.S. Nonfarm Payrolls (NFP) report, expected to show a job addition of 210,000 for April. These events, coupled with the Federal Open Market Committee (FOMC) meeting starting Tuesday, are expected to provide further clarity on the economic landscape and potentially influence gold prices.

Key Developments to Watch:

FOMC Meeting and U.S. Economic Data: The market is bracing for the Fed’s insights into future monetary policy and key economic releases. The outcome of these discussions will likely have a significant impact on the market’s interest rate expectations and, consequently, gold prices.
Geopolitical Tensions: Ongoing conflicts and peace negotiations, particularly between Israel and Hamas, could sway market sentiment and influence safe-haven demand for gold.
Inflation Indicators: Persistent inflation could reinforce gold’s role as an inflation hedge, impacting its price trajectory especially if inflation remains above the Fed’s target rate of 2%.

Gold Prices Forecast

Gold – Chart

Gold prices are currently at $2,334.82, experiencing a slight decrease of 0.20%. The precious metal is hovering just above its pivot point at $2,325.66, suggesting potential upward momentum if it can maintain above this threshold. The immediate resistance lies at $2,370.56, with further hurdles at $2,418.45 and $2,463.94.

Conversely, if gold dips below the pivot, it may encounter substantial support at $2,290.40, followed by $2,248.71 and $2,212.49. The 50-day Exponential Moving Average (EMA) stands at $2,339.52, slightly above the current price, while the 200-day EMA at $2,276.85 underpins a longer-term bullish outlook.

The technical setup suggests a bullish stance above $2,325.66, but a break below this level could trigger a sharper decline.

About the Author

Arslan Aliauthor

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.