Gold (XAU) Daily Forecast: 50% Fibonacci Retracement; Buy Signal Above $2,410?

By:

Published: May 21, 2024, 06:48 GMT+00:00

Key Points:

Gold prices retract to $2437.66 amid easing geopolitical concerns and U.S. rate hike fears.
FOMC Minutes, Fed officials' speeches eyed as gold market braces for potential rate cut signals.
Technical outlook for gold: bullish above $2440.75, with key support at $2411.50 pivotal for trends.

Gold (XAU) Daily Forecast: 50% Fibonacci Retracement; Buy Signal Above $2,410?

Market Overview

In Tuesday’s Asian trading session, gold prices dropped, pulling back from the recent peak of $2,450 amid diminished uncertainties in Iran, which reduced the metal’s safe-haven appeal.

Ongoing concerns about U.S. interest rates also continued to exert pressure. As Federal Reserve officials sought more proof of declining inflation before reducing interest rates, the attractiveness of gold waned.

Additionally, the dollar strengthened in anticipation of the Fed’s late-April meeting minutes set for release on Wednesday, adding further pressure on gold prices.

Geopolitical Turmoil Triggers Safe Haven Demand

The surge in gold prices to recent highs was fueled by demand for safe havens following geopolitical turmoil in the Middle East after the helicopter crash death of Iran’s President.

Nevertheless, the subsequent absence of direct regional instability diminished this demand, leaving gold more exposed to the pressures of U.S. interest rate concerns.

Federal Reserve In Focus

Gold market participants are set to pay close attention to the Federal Open Market Committee (FOMC) Minutes and remarks from Fed officials such as Waller, Williams, Barr, Bostic, Collins, and Mester, all due to speak on Tuesday.

Market forecasts from the CME FedWatch Tool indicate a 76% probability of a 25 basis point rate cut by September, with the potential for two reductions by year-end.

Short-Term Forecast

Gold prices may rally if sustained above $2,410, with potential resistance up to $2,471. Below $2,410, a sell-off could intensify.

Gold Prices Forecast: Technical Analysis

Gold – Chart

Gold prices are currently at $2437.66, marking a decline of 0.57%. The metal’s trading dynamics reflect pivotal technical movements. The immediate pivot point is set at $2440.75, with resistance levels observed at $2448.96, $2459.34, and $2471.10.

Support levels are established at $2425.87, followed by $2411.50, and $2389.63, where a 50% Fibonacci retracement level has been recently confirmed at around $2411. This level is crucial, as a consistent closure above it could trigger a buying trend.

The 50-day and 200-day Exponential Moving Averages are positioned at $2369.02 and $2318.33, respectively, underscoring a strong uptrend momentum over the longer term.

The technical outlook is bullish above $2410; however, a break below this threshold could lead to a sharp selling trend, shifting market sentiment significantly.

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.