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Gold (XAU) Daily Forecast: XAU/USD Hitting $2,385; More Upside Ahead?

By:
Arslan Ali
Updated: Apr 16, 2024, 11:33 GMT+00:00

Key Points:

  • Gold prices near $2,400 peak due to Middle East tensions and U.S. economic data.
  • U.S. dollar strength from positive retail sales counters gold's rise, despite safe-haven demand.
  • Fed's rate decisions eyed as Powell's speech and U.S. economic data could sway markets.
Gold (XAU) Daily Forecast: XAU/USD Hitting $2,385; More Upside Ahead?

In this article:

Market Overview

Gold prices are treading near their record peak, marked at $2,400 last week, as escalating tensions in the Middle East and strong U.S. economic data influence market dynamics. With the ongoing geopolitical conflicts, notably between Iran and Israel, gold has risen modestly to $2,385, underscoring its role as a safe-haven asset during times of global uncertainty.

Geopolitical Tensions Elevate Safe-Haven Demand

Recent strikes between Iran and Israel have heightened investor anxiety, driving demand for safe assets like gold. The likelihood of an expanded conflict involving other regional powers or even global actors like the U.S. adds to the complexity, bolstering gold’s appeal in the market.

Impact of U.S. Economic Data on Gold Prices

The U.S. dollar’s strength continues to be a significant counterweight to gold’s rise, fueled by robust economic indicators. Retail sales in the U.S. surged unexpectedly by 1.1% in March 2024, outpacing the forecasted 0.4% and exerting upward pressure on the dollar. Consequently, the Federal Reserve’s hawkish stance on maintaining higher interest rates to combat inflation has tempered gold’s gains.

Central Bank Policies and Investor Sentiment

Investor focus is keenly set on the Federal Reserve’s upcoming policy decisions, with Fed Chair Jerome Powell’s speech anticipated later today. The Fed’s current approach, influenced by recent inflation data and consumer spending, suggests a potential delay in interest rate cuts, which could further strengthen the dollar and limit gold’s upside.

  • Moreover, today’s economic releases, including U.S. Building Permits and Housing Starts, are expected to provide fresh cues.
  • Building Permits are projected at 1.51 million, slightly down from 1.52 million, while Housing Starts are anticipated to decrease to 1.48 million from 1.52 million.
  • These indicators, coupled with the capacity utilization rate at 78.5%, up from 78.3%, and industrial production growth at 0.4%, up from 0.1%, will likely impact market sentiment and influence gold’s short-term price trajectory.

Let’s jump to gold’s technical outlook and forecast.

Gold Prices Forecast

Gold - Chart
Gold – Chart

Gold’s technical outlook indicates a modest increase of 0.08%, bringing the price to $23,384.79. Currently, gold is holding slightly above the pivotal $2,370.67 mark. Resistance levels are observed at $2,403.98, with subsequent limits at $2,431.98 and $2,459.86 that could restrain further advances.

Support is initially positioned at $2,323.92, with additional fallbacks at $2,296.85 and $2,268.55 should the price retreat. The 50-day Exponential Moving Average (EMA) is at $2,337.46, while the 200-day EMA stands at $2,226.21, indicating potential support zones.

The market is currently observing a consolidation near the $2,084 level, and the formation of a doji candle at $2,385 suggests there could be a temporary bearish correction towards $2,370 before any upward movement resumes. The technical stance is bullish above $2,370.67, but a drop below this level could trigger a sharp decline in prices.

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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