Gold (XAU) Daily Forecast: $2,423 Amid Strong Dollar and Profit-Taking

By:

Arslan Ali

Published: Jul 19, 2024, 06:14 GMT+00:00

Key Points:

Gold (XAU/USD) is set to close the week bearish, trading near $2,423.
Strengthening US Dollar pressures gold prices lower, despite expected Federal Reserve rate cuts.
Rising unemployment claims and geopolitical tensions provide mixed influences on gold prices.

In this article:

Gold

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Market Overview

Gold prices (XAU/USD) are set to close the week on a bearish note, continuing their downward trend. Trading around $2,423, they hit an intraday low of $2,420.

This decline is due to the renewed strength of the US dollar, which has gained despite expectations of a Federal Reserve rate cut in September.

Additionally, profit-taking after a 6.5% rally has exacerbated the drop. However, losses may be limited by cautious market sentiment and increasing geopolitical tensions, which could support gold prices.

US Dollar Strength and Rising Unemployment Claims Pressure Gold Prices

Despite expectations for a Federal Reserve rate cut in September, the US Dollar gained traction and pushed gold prices lower for the third day in a row. The latest report from the Bureau of Labor Statistics showed a rise in unemployment claims to 243,000 and the highest 4-week average in over two and a half years, indicating a weakening job market.

This, combined with decreasing inflation, suggests a potential start to the Fed’s rate cuts. Meanwhile, positive US manufacturing data and market predictions show a 100% chance of a rate cut in September, with two more expected by year-end.

The strengthening US Dollar and rising unemployment claims, alongside expectations of Federal Reserve rate cuts, have pressured gold prices lower for three consecutive days despite positive manufacturing data.

Geopolitical Tensions and Strong Dollar Impact Gold Prices

Former President Donald Trump’s comments about Taiwan paying the US for defense have cast doubt on America’s commitment to defend Taiwan against a potential Chinese attack.

This uncertainty, combined with ongoing conflicts in the Middle East and the prolonged Russia-Ukraine war, could support gold prices (XAU/USD).

However, despite these factors, gold has experienced losses this week due to a strong US dollar and profit-taking from recent rallies.

Short-Term Forecast

Gold prices (XAU/USD) are expected to remain bearish, trading near $2,423 due to a strong US dollar and profit-taking. However, geopolitical tensions may limit further declines.

Gold Prices Forecast: Technical Analysis

Gold – Chart

Gold (XAU/USD) is trading at $2,423.01, reflecting a 0.78% decline. On the 2-hour chart, the pivot point is at $2,434.54. Immediate resistance levels are $2,451.71, $2,469.39, and $2,483.54. Immediate support is at $2,406.76, followed by $2,391.35 and $2,370.13.

The 50-day Exponential Moving Average (EMA) is at $2,442.39, and the 200-day EMA is at $2,394.82. The Relative Strength Index (RSI) stands at 29, indicating oversold conditions.

The outlook remains bearish below $2,435, but a break above this level could signal a bullish trend. Monitoring these key levels will be crucial for trading decisions.

About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.