Gold (XAU) Daily Forecast: Fed’s Hawkish Shift Caps Rise, Prices at $2310

By:

Arslan Ali

Published: Jun 13, 2024, 06:26 GMT+00:00

Key Points:

Gold prices are impacted by the Fed's decision, forecasting only one rate cut in 2024.
U.S. dollar strengthens, putting additional downward pressure on gold prices.
Central bank activities and market speculations continue to influence gold forecasts.

In this article:

Gold

-0.46%

Market Overview

In Thursday’s trading session in Asia, gold prices remained subdued, closely approaching their recent low points. This downtrend follows the Federal Reserve’s updated economic projections, which significantly reduced the likelihood of multiple rate cuts this year, adversely impacting gold’s appeal.

Federal Reserve’s Influence on Gold Prices

The anticipation of reduced rate cuts by the Federal Reserve has injected a more hawkish tone into the market, which has dampened the allure of gold.

The Federal Reserve’s recent announcement indicated a shift to just a single rate cut in 2024, contrasting sharply with the three cuts previously forecasted in March.

This policy shift has driven investors away from gold, which thrives in lower interest rate environments.

Dollar’s Stability Affects Gold

Despite a temporary dip due to softer consumer price index figures, the U.S. dollar regained strength, further pressuring gold prices. The greenback’s recovery was supported by the Fed’s hawkish stance, underscoring gold’s challenges in a strengthening dollar environment.

Central Banks’ Impact and Market Outlook

Adding complexity to gold’s outlook is the activity of major central banks, such as the People’s Bank of China, which reportedly paused its gold buying in May. This has compounded the pressures on gold, alongside the Fed’s rate adjustments.

Nevertheless, some market analysts, including those at Citi, project that gold could potentially escalate to as high as $3,000 per ounce over the next year, reflecting a significant rebound if conditions align.

Short-Term Forecast

Gold prices linger near recent lows, impacted by the Federal Reserve’s update, which anticipates only one rate cut in 2024. This adjustment, coupled with a resilient U.S. dollar, caps gold’s short-term appeal at $2,310.33.

Gold Prices Forecast: Technical Analysis

Gold – Chart

In today’s market, Gold (XAU/USD) exhibited a slight decline, trading down by 0.17% at $2310.33. The pivot point is established at $2310.75, with immediate resistances forming at $2325.55, $2337.19, and $2348.85. Conversely, support levels are set at $2298.00, followed by $2287.07 and $2273.43, indicating potential areas where buyers might step in.

Technical indicators suggest a bearish tone; the 50-Day Exponential Moving Average (EMA) at $2328.40 and the 200-Day EMA at $2333.61 both hover above the current price, reinforcing resistance.

Notably, a bearish engulfing pattern on the 4-hour timeframe coupled with a potential breakout below the $2310 level could intensify selling pressures. However, a move above $2315 might alter the current sentiment, potentially ushering in a bullish phase for gold.

About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

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