Gold (XAU) Daily Forecast: $2,738 Support Holds—What’s Next as Fed Prepares Rate Cuts?

Market Overview

Gold prices have steadily risen in recent weeks as investors turn to the metal amid global uncertainty, particularly driven by ongoing geopolitical tensions in the Middle East. However, a robust US dollar and rising US Treasury bond yields have tempered gold’s momentum, limiting its upside potential.

The US dollar remains strong, trading near its highest levels since August. This strength is largely due to the recent rise in US Treasury yields, which climbed by 62 basis points to 4.20%.

Investors anticipate smaller interest rate cuts from the Federal Reserve in the coming months, with a potential 25 basis point reduction in November. As a result, the dollar’s strength is expected to cap any significant gains in gold prices, as a stronger dollar typically makes gold less attractive for investors.

“Despite geopolitical risks, gold prices may struggle to break higher as long as the US dollar continues to rally,” said a market analyst.

Fed officials remain divided on the future of rate cuts. San Francisco Fed President Mary Daly supports further cuts, stating,

“There’s no reason to stop just yet,” while Kansas City Fed President Jeffrey Schmid has expressed caution, emphasizing that the labor market appears to be stabilizing.

Traders are pricing in around 42 basis points of rate cuts by year-end, down slightly from prior expectations.

On the economic data front, US Initial Jobless Claims are forecasted to rise slightly from 241,000 to 242,000 for the week ending October 19.

Meanwhile, October’s S&P Global Manufacturing PMI is expected to inch up from 47.3 to 47.5, with the Services PMI anticipated to dip slightly from 55.2 to 55.0. As central banks prepare to ease rates, the long-term outlook for gold remains uncertain.

If the Federal Reserve’s easing expectations decline further, gold could face additional downward pressure despite the safe-haven demand driven by geopolitical risks.

Short-Term Forecast

In the short term, gold prices are likely to maintain upward momentum above the $2,738 pivot. Immediate resistance lies at $2,754, with support at $2,725, while the strong US dollar could cap gains.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading at $2,750.21, up 0.05%, maintaining its upward momentum in the short term. The key pivot point to watch is $2,738.16—if gold stays above this level, the buying trend looks strong. Immediate resistance is at $2,754.01, with further resistance at $2,766.90 and $2,777.01.

On the downside, immediate support sits at $2,725.79, and a break below could push prices toward $2,715.89 or $2,704.76.

The 50-day EMA at $2,719.07 is supporting the bullish trend, but if prices fall below the pivot, we could see more aggressive selling. Stay bullish above $2,738, but prepare for possible sharp declines if it breaks below.