Gold (XAU) Daily Forecast: Dollar Weakness Lifts Prices Over $2415; More Gains Ahead?

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Updated: Jul 31, 2024, 06:52 GMT+00:00

Key Points:

Gold price (XAU/USD) reached $2416.43, continuing its upward trend amid a weaker US dollar.
Israeli attack on Lebanon increased geopolitical tensions, supporting higher gold prices.
Traders are cautious, awaiting the Federal Reserve's rate-cut decisions and FOMC meeting outcomes.

Gold (XAU) Daily Forecast: Dollar Weakness Lifts Prices Over $2415; More Gains Ahead?

Market Overview

Gold price (XAU/USD) extended its two-day upward trend, reaching $2416.43 with an intraday high of $2421. This movement is attributed to a weaker US dollar, with expectations of the Federal Reserve’s rate-cutting cycle starting in September.

Additionally, the Israeli attack on Lebanon’s capital increased the risk of escalating geopolitical tensions in the Middle East. A sluggish global economic outlook also supported higher gold prices.

Traders are cautious, avoiding large investments until more information on the Federal Reserve’s rate-cut decisions is available. The focus remains on today’s Federal Open Market Committee (FOMC) meeting and geopolitical events, influencing XAU/USD’s short-term direction.

US Dollar Weakness and Mixed Data Lift Gold Prices Amid Rate-Cut Hopes

The US dollar dropped on expectations that the Federal Reserve might cut interest rates in September. Despite a brief lift from positive macro data, the dollar’s momentum faded. June saw 8.18 million job openings, slightly down from May but above expectations. The Consumer Confidence Index rose to 100.3 in July from 97.8 in June, reflecting job market optimism.

The weaker dollar and mixed economic data, along with anticipated rate cuts, support higher gold prices as investors seek safe-haven assets amid uncertain economic conditions.

Geopolitical Tensions and Economic Uncertainty Drive Gold Prices Higher

Escalating tensions in the Middle East have pushed gold prices to a one-week high. The Israeli military’s attack on Beirut, targeting a Hezbollah commander, has raised fears of a broader conflict.

This geopolitical risk, along with a slight US dollar pullback and concerns about a global economic slowdown, has driven investors to gold as a safe-haven asset.

Economic data from Europe and China also impacted gold prices. Germany’s economy shrank by 0.1% in the second quarter, while China’s manufacturing sector contracted for the third consecutive month in July, with modest growth in services.

These uncertainties have added to gold’s appeal amidst fluctuating economic conditions and geopolitical instability.

Short-Term Forecast

Gold (XAU/USD) may continue its upward trend, supported by a weaker US dollar and ongoing geopolitical tensions, targeting $2422.04. However, caution is advised ahead of the FOMC meeting.

Gold Prices Forecast: Technical Analysis

Gold – Chart

Gold (XAU/USD) prices stand at $2416.43, up 0.19%. Key levels to watch include a pivot point at $2403.59. Immediate resistance is at $2422.04, with further levels at $2440.04 and $2457.40. Support levels are found at $2383.74, $2369.11, and $2353.44.

The 50-day EMA is $2397.30, while the 200-day EMA is $2379.00. Current technical indicators suggest a bullish trend. Maintaining above $2403.59 supports this outlook, but a break below could trigger significant selling pressure.

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.