Market Overview
Gold (XAU/USD) extended its rise, with prices reaching an intraday high of $2,388. This upward trend is driven by several factors. Expectations that the Federal Reserve will start cutting rates in September have pressured the US dollar, benefiting gold.
Additionally, risk-off sentiment and geopolitical risks from Middle East conflicts have increased demand for this safe-haven asset.
Looking ahead, the focus will shift to the Federal Open Market Committee (FOMC) meeting on Wednesday and key US economic data, including the Nonfarm Payrolls (NFP) report on Friday. These events are likely to significantly impact USD and XAU/USD prices.
Fed Rate Cut Expectations and Easing Inflation Boost Gold Prices
The US dollar is struggling to maintain its upward trend as markets increasingly expect the Federal Reserve to cut rates in September. Recent data showing easing price pressures have reinforced these expectations, keeping US Treasury bond yields low.
The US Commerce Department reported a 0.1% rise in the Personal Consumption Expenditures (PCE) Price Index for June, down from no change in May. The core PCE Price Index, excluding food and energy, rose by 0.2% and remained at 2.6% year-over-year, indicating easing inflation.
Lower bond yields and expected rate cuts support higher gold prices by reducing the opportunity cost of holding non-yielding gold.
Middle East Tensions Drive Gold Prices Higher
Persistent tensions in the Middle East are pushing gold prices higher as investors seek safe-haven assets. Israel has vowed retaliation against Hezbollah for an attack on the Golan Heights but aims to avoid a full-scale war.
The WHO has called for a ceasefire to allow vaccines to reach children in Gaza, where recent Israeli attacks have killed at least 33 people. The conflict has resulted in over 39,000 deaths and nearly 91,000 injuries.
Ongoing blame between Hamas and Israeli leaders for delays in ceasefire and prisoner exchange talks further escalates tensions, driving gold prices higher amid increased geopolitical uncertainty.
Short-Term Forecast
Gold (XAU/USD) is expected to maintain its bullish trend above $2377.77. Immediate resistance levels to watch are $2402.84 and $2422.04, with support at $2356.14.
Gold Prices Forecast: Technical Analysis
Gold (XAU/USD) is trading at $2388.85 on the 4-hour chart, up 0.13%. The pivot point is $2377.77, a critical level for market direction.
Immediate resistance is seen at $2402.84, with further resistance at $2422.04 and $2440.04. Immediate support is noted at $2356.14, followed by $2338.97 and $2320.39.
Technical indicators show the 50-day Exponential Moving Average (EMA) at $2395.54 and the 200-day EMA at $2377.69. The double bottom support level around $2375 is likely to drive a buying trend, while the 50 EMA may extend resistance.
The outlook remains bullish above $2377.77, but a break below this level could trigger a sharp selling trend.
