Gold (XAU) Daily Forecast: Prices Rise to $2,342; Choppy Session in Play

Arslan Ali
Published: May 31, 2024, 06:29 GMT+00:00

Key Points:

  • XAU/USD edged higher to $2,342.86, supported by a weakening US dollar and lower Treasury yields.
  • Anticipation grows for the US Core PCE data release, influencing potential Fed rate cuts and gold's trajectory.
  • Rising geopolitical tensions in the Middle East, particularly Israel's actions, bolster gold's safe-haven appeal.
Gold (XAU) Daily Forecast: Prices Rise to $2,342; Choppy Session in Play

In this article:

Market Overview

On Friday, the XAU/USD price edged higher, rising to $2,342.86 per ounce in Asian markets. This modest increase was influenced by a weakening US dollar and lower US Treasury yields, which enhanced gold’s appeal as a safe-haven asset.

Traders are increasingly betting on a potential Federal Reserve rate cut this year, especially following the recent disappointing US GDP data.

Inflation Data and Its Implications for Gold

Investors are particularly focused on the upcoming release of the US Core Personal Consumption Expenditures Price Index (Core PCE) for April. Expected to show a month-on-month increase of 0.3% and a year-on-year rise of 2.8%, this data could stiffen the dollar if figures exceed expectations, potentially capping gains in the gold market.

Geopolitical Developments and Market Response

Amid escalating tensions in the Middle East, gold continues to benefit from its status as a traditional safe-haven asset.

The recent assertive military actions by Israel, establishing control over strategic border regions, have heightened geopolitical uncertainties, further supporting gold’s value.

US Economic Indicators and Federal Reserve Outlook

Recent US economic indicators have shown a mixed picture. The second estimate of the Q1 GDP confirmed a growth rate of 1.3% annually, consistent with expectations but down from the previous 1.6%.

Meanwhile, US jobless claims unexpectedly rose to 219K, suggesting potential volatility in the labor market. Comments from Federal Reserve officials, including Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic, underscore a cautious approach towards rate cuts, emphasizing ongoing concerns about inflation and economic stability.

Short-Term Forecast

Gold (XAU/USD) sees a slight increase to $2,342.86 per ounce, with market sentiment buoyed by a dip in the US dollar and Treasury yields. Investors are now keenly anticipating the upcoming US Core PCE data, which is expected to influence Fed rate decisions and gold’s price trajectory.

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.