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Gold (XAU) Daily Forecast: Price Holds at $2,310, What to Expect Before Weekend?

By:
Arslan Ali
Updated: Jun 14, 2024, 08:31 GMT+00:00

Key Points:

  • Gold prices remained subdued in Asian trade, pressured by a rebounding dollar and fewer U.S. interest rate cuts.
  • The Federal Reserve's forecast for only one rate cut in 2024 has weighed on gold, strengthening the dollar.
  • Geopolitical tensions and political uncertainty in Europe provide some support to gold amid easing U.S. inflationary pressures.
Gold (XAU) Daily Forecast: Price Holds at $2,310, What to Expect Before Weekend?

In this article:

Market Overview

Gold prices remained subdued in Asian trade on Friday, pressured by a rebounding dollar as the prospect of fewer U.S. interest rate cuts offset optimism over cooling inflation. While gold showed some gains for the week, it faced resistance due to high interest rates, falling from recent highs. The Federal Reserve’s forecast for only one rate cut in 2024, down from three earlier predictions, has weighed on the yellow metal.

Federal Reserve’s Hawkish Outlook

The Fed’s hawkish stance has impacted gold and broader metal prices. The central bank’s expectation of only one rate cut in 2024 has strengthened the U.S. dollar, making non-yielding assets like gold less attractive.

Despite softer consumer price index (CPI) data initially weakening the dollar, traders shifted back to the dollar following the Fed’s projections.

The Producer Price Index (PPI) for May rose by 2.2% year-on-year, slightly below expectations, further supporting the dollar.

Geopolitical and Economic Factors

Geopolitical tensions in the Middle East and political uncertainty in Europe, such as the snap election in France, continue to provide some support to gold prices.

These factors, combined with signs of easing inflationary pressures in the U.S., have led markets to price in a possible rate cut by the Fed as early as September. This has kept U.S. Treasury yields low, lending some support to gold.

Data-Driven Market Dynamics

The U.S. Bureau of Labor Statistics reported unchanged consumer prices in May, with the yearly rate decreasing to 3.3% from 3.4% in April. The annual core PPI rose 2.3%, below market expectations.

Additionally, initial unemployment claims increased to 242,000 last week, up from 229,000. These data points, along with the upcoming Michigan US Consumer Sentiment Index, will continue to influence USD price dynamics and short-term trading opportunities for gold.

Short-Term Forecast

Gold (XAU/USD) remains under pressure around $2,310 due to the Federal Reserve’s hawkish outlook. Key support levels at $2,298 and $2,287 could be tested if downward momentum persists.

Gold Prices Forecast: Technical Analysis

Gold - Chart
Gold – Chart

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.

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