Gold Prices Forecast: XAU/USD Tests New Highs As Traders Focus On U.S. Dollar’s Pullback

Gold settled above the $2360 level and continues to move higher ahead of Non Farm Payrolls report, which is expected to show that Non Farm Payrolls declined from 272,000 in May to 190,000 in June.

U.S. dollar tests weekly lows against a broad basket of currencies, providing material support to gold markets. Treasury yields are moving lower, which is also bullish for gold and other precious metals. The yield of 2-year Treasuries settled below the 4.70% level, while the yield of 10-year Treasures moved below 4.35%.

From a big picture point of view, gold received strong support in the $2295 – $2305 range, which may mark the near-term bottom for gold markets. Previously, traders were worried that China’s Central Bank stopped buying gold when prices were moving towards the $2450 level.

Apparently, there are many buyers when gold pulls back towards $2300, and the price cannot break lower. This situation cannot go unnoticed by speculative players, which may drive demand and push gold back towards historic highs.

The recent comments from Fed Chair Powell, who talked about disinflation trends, have also served as a positive catalyst for gold markets. Traders bet that Fed will start cutting rates ahead of U.S. elections, which will be bullish for gold markets.

The technical picture remains extremely favorable for gold. The support at $2295 – $2305 has been tested many times and proved its strength. RSI is in the moderate territory, and there is enough room to gain additional upside momentum in the near term. Gold has recently managed to settle above the 50 MA at $2339, suggesting momentum was building. The nearest significant resistance level for gold is located in the $2390 – $2400 range. Gold needs to settle above the $2400 level to gain additional momentum. In this scenario, gold may quickly get to the test of the $2450 level. A move above $2450 will open the way to the test of the psychologically important $2500 level. Most likely, such a move would attract a wave of speculative buying in gold markets and also provide support to other precious metals.

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