Gold (XAU) Daily Forecast: Bullish Bias Holds Above $2,512 Despite Strong USD

Market Overview

Gold prices (XAU/USD) rose on Thursday, climbing to $2,516, with an intraday high of $2,519. Despite this momentum, the precious metal remains below its all-time peak.

The rise in US Treasury bond yields, fueled by diminishing expectations of aggressive rate cuts by the Federal Reserve, has created headwinds for gold, traditionally a non-yielding asset.

As a result, the US Dollar (USD) edged closer to its monthly high, dampening the potential for significant gold price gains.

Impact of CPI Data on Gold and Interest Rate Expectations

Gold’s recent price action reflects market adjustments following the latest Consumer Price Index (CPI) report. The CPI data for August revealed a 0.2% monthly increase, with the annual inflation rate slowing to 2.5%—its lowest since February 2021.

Meanwhile, core CPI, excluding volatile food and energy prices, rose by 0.3% in August, meeting market expectations at 3.2% year-over-year. The data prompted investors to reassess the likelihood of a large Federal Reserve rate cut.

Markets now predict an 87% chance of a 25-basis-point cut at the upcoming Fed meeting on September 17-18, up from 71% prior to the CPI release. The decreased odds of a more substantial rate cut have lifted Treasury bond yields, adding pressure on gold prices.

The upcoming Producer Price Index (PPI) report is expected to provide additional insights into inflationary pressures, although its impact may be limited.

Risk-On Sentiment and China’s Economic Outlook Weigh on Gold

In addition to rate-cut expectations, a shift toward risk-on sentiment could reduce demand for safe-haven assets like gold. China’s economic struggles, including deflation risks and a growing trade surplus, have contributed to this sentiment.

Morgan Stanley’s Chief China Economist, Robin Xing, highlighted the potential need for major stimulus measures to address China’s debt-deflation problem.

These developments could further limit gold’s upside, as investor confidence rises and riskier assets become more attractive. Despite these headwinds, gold’s resilience reflects underlying economic uncertainties that continue to support its appeal as a safe-haven asset in volatile markets.

Short-Term Forecast

Gold prices are holding steady above $2,512, but momentum could shift if support breaks. Watch for resistance at $2,539 to gauge potential upside.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading at $2,516, up by 0.22% as it holds above the critical support level of $2,512.17. The immediate resistance sits at $2,539.43, and a break above this could propel the price toward the next resistance level of $2,548.82.

However, failure to hold the $2,512 support could trigger a sell-off, pushing prices towards the next support at $2,485.44. The 50-day Exponential Moving Average (EMA) at $2,507.22 is providing solid support, while the 200-day EMA at $2,475.18 indicates a broader bullish outlook.

Overall, gold’s technical setup remains cautiously bullish, but a break below $2,512 could shift the momentum.