Gold (XAU) Daily Forecast: $2,744 Pivot Holds—Will Fed Rate Cut Fuel Gains?

Market Overview

Gold prices (XAU/USD) began the week on a positive note, trading near $2,738 and briefly reaching $2,743 on Monday. The increase reflects rising geopolitical tensions in the Middle East and uncertainty surrounding the upcoming U.S. presidential election.

These factors have driven investors to gold, reinforcing its role as a safe-haven asset amidst global instability.

However, gold’s upward momentum faces potential resistance due to a strengthening U.S. dollar and rising bond yields.

“When yields climb, non-yielding assets like gold often become less attractive to investors,” explained a market analyst.

Bond yields have edged up in recent sessions, weighing on gold’s appeal. With the election on Tuesday, market participants are closely watching how its outcome could further influence gold demand.

Dollar Weakness and Fed Rate Cut Hopes Bolster Gold

The U.S. dollar has weakened slightly, pressured by election-related uncertainties and upcoming Federal Reserve decisions. With the Fed’s rate decision due on Thursday, most analysts expect a rate cut of 25 basis points rather than a more aggressive 50-point cut.

“A rate cut could support gold, as lower rates tend to weaken the dollar and increase gold’s appeal,” noted analysts from Commerzbank.

The anticipation of rate cuts, coupled with high government deficits, is expected to push more investments into gold ETFs.

Commerzbank analysts believe a rate reduction could significantly impact gold demand, although the scale of investment might hinge on the election’s outcome.

Central banks are also forecasted to continue buying gold, though likely in smaller quantities than in recent years.

Jewelry Demand and Central Bank Purchases Expected to Vary

While jewelry demand remains lower than last year, recent projections suggest it could see a modest improvement compared to earlier expectations. Meanwhile, central banks are expected to sustain gold purchases, albeit at a slower pace.

“The demand trend for gold remains strong, especially from institutional investors seeking security amidst political and economic uncertainty,” one market strategist commented.

In summary, gold is likely to stay supported by geopolitical tensions, a potentially weaker dollar, and Fed rate cuts. With rising safe-haven demand, investors are expected to lean toward gold ETFs and other investments tied to this historically stable asset.

Short-Term Forecast

Gold prices hover near a critical pivot at $2,744. A breakout above this level may signal bullish momentum toward $2,754.58, while remaining below could sustain bearish pressure.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading at $2,738.77, up a modest 0.08%, and sits just below a key pivot point at $2,744. This level is crucial; if gold breaks above it, we might see a push toward immediate resistance at $2,754.58, with further targets at $2,762.54 and $2,773.40.

On the downside, support holds at $2,731.98, with additional layers at $2,724.73 and $2,717.08. The 50-day EMA at $2,752.78 suggests a short-term resistance, while the 200-day EMA at $2,720.54 provides a solid support base.

Right now, it’s a close call, with a break above $2,744 potentially fueling bullish momentum, while staying below could keep the tone bearish.