Market Overview
Gold (XAU/USD) has regained ground, drawing bids around the $2,454.57 level and hitting an intraday high of $2,458. This rally is driven by expectations of a September Fed rate cut, which weakens the US dollar and boosts gold prices.
Additionally, ongoing geopolitical tensions in the Middle East are supporting gold as a safe-haven asset. Iran dismissed calls from the UK and other Western nations to avoid retaliating against Israel after the assassination of Hamas leader Ismail Haniyeh in Tehran, according to the BBC.
These geopolitical tensions, including Iran’s defiance against Western calls, are likely to further boost gold prices as investors seek safety in the precious metal amid escalating conflicts.
Gold Prices Supported by Weaker Dollar, Rate Cut Expectations Limit Gains
The US dollar is losing traction as expectations for a Federal Reserve rate cut in September rise, offering some support to gold prices. Investors are awaiting key data this week, including US Retail Sales, Initial Jobless Claims, the Philly Fed Manufacturing Index, and Industrial Production.
July’s inflation data showed the Consumer Price Index (CPI) increased by 0.2% month-over-month, with an annual rate of 2.9%. Core CPI, excluding food and energy, also rose by 0.2% monthly and 3.2% annually.
Phillip Streible from Blue Line Futures notes that expectations have shifted to a 25 basis point cut rather than 50, reducing gold’s momentum. The market now sees a 41% chance of a 50 basis point cut, down from 50% before the CPI data. Cautious Fed officials are likely to dampen gold’s momentum further, despite support from a weaker dollar.
Gold Price Forecast
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See all Gold forecastsShort-Term Forecast
Gold is likely to remain supported above $2,443.32, with potential upside targeting $2,477.79, driven by expectations of a Fed rate cut and ongoing geopolitical tensions.
Gold Prices Forecast: Technical Analysis
Gold (XAU/USD) is currently trading at $2,454.57, up 0.25% on the day. The price is encountering significant resistance near the $2,477 level, where a triple top pattern is forming, creating a major hurdle for further upside.
This resistance has pushed gold back toward the pivot point at $2,443.32. However, the 50-day EMA at $2,437.97 is providing strong support, suggesting that the bullish trend could continue if prices hold above this level.
On the downside, immediate support lies at $2,422.13, with further support at $2,402.92. We could see a sharp sell-off if the price breaks below the pivot point. However, if it remains above, gold may push higher, targeting $2,477.79 and beyond.
