Gold (XAU) Daily Forecast: Price Nears $2359; 38.2% Fibo Level a Hurdle

Arslan Ali
Updated: May 29, 2024, 06:39 GMT+00:00

Key Points:

  • Gold prices drop as USD rebounds amid hawkish Fed remarks and strong US economic data.
  • Traders watch Fed's Beige Book and Core PCE data for signs of persistent inflation.
  • Geopolitical tensions and central bank demand support gold as a safe-haven asset.
Gold (XAU) Daily Forecast: Price Nears $2359; 38.2% Fibo Level a Hurdle

In this article:

Market Overview

Gold price (XAU/USD) has broken its three-day winning streak as the US Dollar (USD) modestly rebounds. Hawkish remarks from several Federal Reserve (Fed) officials and stronger-than-expected US economic data have dampened expectations of a Fed rate cut in September.

This has boosted the USD, weighing on gold prices denominated in dollars. However, ongoing geopolitical tensions and uncertainties could bolster gold’s appeal as a safe-haven asset. Increasing demand from central banks is also expected to support higher gold prices in the near term.

Fed’s Beige Book and Economic Data

Gold traders are closely monitoring the Fed’s Beige Book and a speech by Fed’s John Williams. The US Core Personal Consumption Expenditures Price Index (Core PCE), set for release on Friday, is forecasted to increase by 0.3% MoM and 2.8% YoY in April.

Persistently high inflation could delay the Fed’s rate cuts, potentially putting further pressure on gold prices, as higher interest rates raise the opportunity cost of holding non-yielding assets like gold.

Geopolitical Tensions and Market Reactions

Israeli Prime Minister Benjamin Netanyahu has pledged to continue actions against Hamas following an airstrike in Rafah that killed at least 45 people. Such geopolitical tensions often drive demand for safe-haven assets, including gold.

Additionally, the World Gold Council reported a net outflow of 11.3 metric tonnes from global physically-backed gold exchange-traded funds (ETFs) last week, which could influence market sentiment.

Gold Price Projections and Economic Indicators

UBS analysts project that gold prices could reach $2,500 an ounce by September and $2,600 by year-end, surpassing earlier forecasts of $2,400 and $2,500, respectively. The Conference Board reported an improvement in Consumer Confidence, with the figure rising to 102.0 in May from 97.0 in April, beating the estimate of 95.9. These economic indicators are essential for understanding market dynamics.

Fed Governor Michelle Bowman indicated a preference for a more moderate tapering process, while Fed Minneapolis President Neel Kashkari emphasized the need for significant progress on inflation before cutting rates, projecting no more than two rate cuts in 2024. In summary, the XAU/USD price forecast shows a cautious outlook amid the Fed’s hawkish stance and robust economic data.

Short-Term Forecast

Gold (XAU/USD) is currently trading at $2359, down 0.14%. Hawkish remarks from Fed officials and strong US economic data have weighed on gold prices. Traders are monitoring the Fed’s Beige Book and upcoming Core PCE data.

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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