Gold (XAU) Daily Forecast: Hits $2,400 Amid Middle East Tensions

Arslan Ali
Published: Apr 12, 2024, 07:05 GMT+00:00

Key Points:

  • Gold reaches $2,400 high amid Middle East tensions, reinforcing its safe-haven appeal.
  • Softer U.S. PPI bolsters expectations for Federal Reserve rate cuts, supporting gold prices.
  • Fed's cautious rate outlook contrasts with strong dollar, yet gold maintains upward momentum.
Gold (XAU) Daily Forecast: Hits $2,400 Amid Middle East Tensions

In this article:

Market Overview

The price of Gold (XAU/USD) approached the $2,400 threshold, hitting a new all-time high in the European trading session on Friday. This surge is largely driven by ongoing geopolitical uncertainties in the Middle East, which enhance the metal’s status as a safe haven.

Middle East Tensions Fuel Safe Haven Demand

The price of Gold continues to benefit from ongoing geopolitical risks, particularly those emerging from the Middle East. Tensions have escalated following a suspected Israeli airstrike on Iran’s embassy in Syria, with Iran vowing retaliation.

This instability has heightened the allure of Gold as a safe-haven asset. Market reaction to these developments was notable, with Gold prices surging to a recent high of $2,400. This rise underscores the metal’s role as a preferred safe asset during times of geopolitical uncertainty.

Central Bank Policies Support Gold

Expectations of interest rate cuts by major central banks remain a supportive factor for Gold. Notably, the U.S. Producer Price Index (PPI) for March, released on Thursday, showed a milder-than-anticipated increase of just 0.2% month-on-month, against expectations of a 0.3% rise.

This softer inflation data has bolstered hopes for near-term rate cuts by the Federal Reserve, providing additional momentum to Gold’s ascent.

Consequently, Gold prices responded positively, with an increase of 0.54% on Friday, reflecting renewed investor interest in the safe-haven asset amid these economic signals.

Fed’s Rate Cut Outlook

Market sentiment is influenced by the anticipation of the Federal Reserve’s monetary policy direction. According to recent statements from Fed officials and the CME Group’s FedWatch tool, rate cuts are not projected to begin until September 2023, and the market now anticipates fewer rate cuts, likely totaling only 50 basis points this year.

This cautious approach to U.S. monetary policy, alongside a relatively strong U.S. dollar, which currently stands at an index of 103.2, moderates but does not completely counteract the upward trajectory of Gold, which has recently surpassed the $2,400 mark.

Gold Prices Forecast

Gold - Chart
Gold – Chart

Today’s technical outlook for Gold (XAU/USD) shows the metal trading higher at $2,391.11, a 0.54% increase, as it continues its ascent within an established upward channel. The current pivot point is set at $2,367.21, which underpins the bullish sentiment.

Resistance levels are identified at $2,403.98, $2,429.26, and $2,459.71, marking potential targets for further price advances. Supportive measures are found at $2,337.34, with additional support at $2,305.17 and $2,270.12, which could contain price pullbacks.

Both the 50-Day and 200-Day Exponential Moving Averages, at $2,343.87 and $2,269.21 respectively, lend credence to the bullish trend. Overall, maintaining above $2,365 suggests continued bullish momentum, while a break below this level could initiate a sharp selling trend.

About the Author

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.

Did you find this article useful?