Gold (XAU) Daily Forecast: Bullish Momentum Holds as Gold Targets $2,670 Resistance

Market Overview

Gold (XAU/USD) began the week on a strong note, reaching $2,665.56 as inflation data from the US hinted at a potential rate cut by the Federal Reserve. The Producer Price Index (PPI) for September showed a 1.8% rise in overall prices and a 2.8% increase in core prices, slightly exceeding expectations but still pointing to slowing inflation.

This bolstered speculation that the Fed could cut interest rates by 25 basis points in November, with the CME Group’s FedWatch Tool indicating a 90% likelihood of such a move.

US Dollar Weakens Amid Easing Inflation

The US Dollar softened due to the favorable inflation outlook, though the 10-year US Treasury yield remained above 4%, reflecting market caution.

While a weaker dollar often supports gold by making it cheaper for international buyers, the elevated Treasury yields limit the metal’s upside potential.

Geopolitical Tensions and China’s Economic Challenges Boost Gold’s Appeal

Geopolitical tensions in the Middle East have increased demand for safe-haven assets like gold, further supporting its price. At the same time, uncertainty surrounds China’s recent stimulus efforts.

The Consumer Price Index (CPI) for September was flat, with only a 0.4% annual increase, missing market expectations and raising concerns about the strength of China’s economic recovery.

With the US market closed for Columbus Day, gold prices will largely depend on US Dollar fluctuations and any further geopolitical developments.

Despite uncertainties, gold’s safe-haven status continues to attract investors amid global economic concerns.

Short-Term Forecast

Gold is likely to maintain its bullish momentum above $2,662, with resistance at $2,670.56. A break below this level could trigger selling pressure, with key support at $2,638.10.

Gold Prices Forecast: Technical Analysis

Gold is trading at $2,665.56, up 0.31%, showing steady momentum as it stays above the pivot point of $2,661.52. Immediate resistance sits at $2,670.56, with further barriers at $2,677.72 and $2,685.66.

On the downside, key support levels are at $2,650.43 and $2,638.10, aligning with the 50-day EMA at $2,638.47.

A bullish continuation seems likely if gold remains above $2,662, especially with a “three white soldiers” candlestick pattern supporting the uptrend. However, a break below this level could trigger sharp selling pressure. Keep an eye on the 50-day EMA for potential shifts in momentum, as it acts as a key support zone.