Market Overview
Gold (XAU/USD) edged higher on Tuesday, trading at $2,345 after rebounding from a two-week low of $2,325. The softer US Dollar (USD) and safe-haven flows amid ongoing geopolitical tensions in the Middle East support the precious metal. An Israeli airstrike in Rafah, resulting in 45 casualties, has intensified the safe-haven demand for gold.
US Economic Data and Fed Policy Implications
Higher short-term Treasury yields, spurred by hawkish Federal Reserve minutes and robust US economic data, are expected to bolster the Greenback in the near term.
Traders remain cautious ahead of significant US inflation data releases, including the US Core Personal Consumption Expenditures (PCE) Price Index on Friday. The PCE is projected to rise by 0.3% month-on-month and 2.8% year-on-year in April.
This data, along with speeches from Fed officials Neel Kashkari, Mary Daly, and Lisa Cook, could influence market expectations of future Fed rate cuts.
Market Sentiment and Price Projections
Fed meeting minutes revealed a potential for prolonged policy rate maintenance, with discussions on possible future hikes. The CME FedWatch Tool indicates a 49% probability of a rate cut in September, down from 63% the previous week.
Analysts from UBS and Citi have raised their gold price projections. UBS forecasts $2,600 by the end of 2024, and Citi predicts $3,000 per ounce within the next 6 to 18 months.
Despite the broader outlook for higher interest rates, which typically increase the opportunity cost of holding non-yielding gold, the current geopolitical climate and economic uncertainty provide strong support for gold prices.
According to Reuters technical analyst Wang Tao, spot gold may break the nearest resistance at $2,357 per ounce and rise towards the $2,363–$2,373 range.
Short-Term Forecast
Gold (XAU/USD) is expected to face resistance at $2,366.30, with support at $2,325.13. A break above $2,351.36 could shift sentiment to bullish. Current geopolitical tensions and US economic data are key factors influencing price movements.
Gold Prices Forecast: Technical Analysis
Gold (XAU/USD) is trading at $2,349.735, slightly down by 0.02% on the 4-hour chart. The pivot point, marked by the green line at $2,351.36, is crucial for determining market direction.
Immediate resistance levels are at $2,366.30, $2,392.21, and $2,410.23. On the downside, immediate support is observed at $2,325.13, followed by $2,304.38 and $2,285.77.
The 50-day Exponential Moving Average (EMA) stands at $2,365.02, while the 200-day EMA is positioned at $2,334.68. These indicators suggest that gold remains bearish below the pivot point of $2,351.36.
Gold’s outlook remains bearish below $2,351.36. However, a break above this level could enhance bullish momentum.
