Gold Price Forecast: Global Central Banks’ Data-Driven Outlook to Impact XAU

Highlights

• Gold prices dip as the U.S. dollar surges.
• Expectations of central banks halting rate hikes boost gold demand.
• U.S. employment data crucial for future Fed rate decisions.

Overview

Gold (XAU) prices experienced a slight dip on Tuesday as the U.S. dollar saw a surge. All eyes were on the upcoming economic data, as investors sought clues about the duration of rising interest rates in response to stubborn inflation.

Last Month’s 2.3% Surge Fueled by Rate-Peak Speculation

During July, gold prices had a strong showing, recording a 2.3% increase, the most substantial monthly rise in four months. This surge was driven by expectations that global central banks might soon halt their cycle of rate hikes. Lower interest rates tend to boost demand for zero-yield bullion, making gold an attractive investment.

Technical Resistance, Powell Comments Weigh

However, the rally now faces technical resistance, and recent remarks from Jerome Powell served as a reminder that the market might have overreacted to a few soft U.S. economic data points. Chicago Federal Reserve President Austan Goolsbee emphasized that the central bank is treading carefully in its efforts to curb inflation without triggering a recession. The approach remains data-dependent, and September will be crucial for assessing whether further monetary tightening is warranted.

The central banks worldwide are closely monitoring the inflation situation, hoping for a swift disinflation process. This focus on data-driven decision-making explains why they are adhering to a cautious stance.

Traders Eyeing US Employment Data

In the coming days, U.S. employment data will play a pivotal role in shaping expectations regarding future interest rate changes by the Federal Reserve. Any positive surprises in the employment figures could serve as a reminder that another rate hike remains a possibility, putting pressure on gold prices.

Bearish Impact of Stronger Dollar

The strength of the U.S. dollar also contributed to gold’s decline, as a recent Fed survey revealed that U.S. banks have tightened credit standards and experienced weaker loan demand from businesses and consumers during the second quarter.

Short-Term Outlook:  Sideways-to-Lower

In conclusion, gold prices may experience short-term fluctuations based on economic data and statements from central bank officials. Investors should keep a close watch on employment figures and the Fed’s actions to better gauge the outlook for gold prices in the near future.

Technical Analysis

Gold (XAU/USD) market sentiment appears to be mixed in the short term. The current price at 1955.49 is above the 200-4H moving average of 1942.13, which suggests a bullish aspect. However, the price is slightly below the 50-4H moving average of 1963.26, indicating a potential bearish signal. The 14-4H RSI reading of 45.03 suggests a neutral-to-lower momentum.

The main support area lies between 1942.50 and 1948.25, with the price currently above this range, providing some support. On the other hand, the main resistance area is between 1979.00 and 1987.53, which could act as a barrier to further upside movement.

Traders should exercise caution and closely monitor the 50-4H moving average and the main resistance area for potential shifts in market direction. The mixed signals from the technical indicators indicate uncertainty in the short term for Gold (XAU/USD).