Gold (XAU) Daily Forecast: Bullish Momentum Targets $2,600 Amid Fed Rate Cuts

Market Overview

Gold prices (XAU/USD) are on an upward trend for the second consecutive day, approaching the record high of $2,595. This surge comes on the heels of the Federal Reserve’s significant interest rate cut earlier in the week.

Fed officials have signalled the possibility of another 50 basis points reduction in borrowing costs by year-end, which is exerting pressure on the US Dollar (USD), currently hovering near its year-to-date lows.

With the dollar weakening, gold—often considered a safe-haven asset—has gained fresh appeal as a reliable store of value.

Gold Gains Appeal Amid US Dollar Weakness and Economic Concerns

The US dollar is losing ground following the Fed’s aggressive monetary policy. The 50 basis points rate cut this week has made the dollar less attractive to investors. Fed officials have hinted at further cuts, with borrowing rates potentially dropping to 3.4% in 2025 and 2.9% by 2026.

This outlook bolsters gold’s attractiveness, as lower interest rates tend to diminish the dollar’s strength, making non-yielding assets like gold more appealing.

Positive economic data, such as a drop in weekly jobless claims to 219,000—the lowest since May—and an unexpected rise in the Philadelphia Fed’s manufacturing index from -7.0 to 1.7, haven’t provided much support for the dollar.

Concerns over economic growth persist, especially with the Fed’s aggressive monetary policy and signs of a slowdown in China.

Increased Demand for Gold Amid Economic and Geopolitical Uncertainty

In addition to the Fed’s policy decisions, concerns over economic slowdowns in both the US and China are adding upward pressure on gold prices.

These concerns are further compounded by ongoing geopolitical tensions, especially in the Middle East and continued instability in Eastern Europe.

Political uncertainty in the US as the presidential election approaches has also contributed to gold’s recent gains. As the global economic and political landscape remains unpredictable, demand for gold is likely to stay elevated.

Analysts predict that gold prices could continue their upward trajectory, surpassing the $2,600 mark in the coming weeks, fueled by a weakening dollar and increased investor interest in safe-haven assets.

Short-Term Forecast

Gold (XAU/USD) continues its upward trend, nearing $2,595. With key support at $2,585 and resistance at $2,604, bullish momentum may persist, driven by a weak USD and Fed rate cuts.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading at $2,593.65, up 0.23%, showing continued strength. The pivot point at $2,585.89 is acting as a key support level, helping to maintain the upward momentum. Immediate resistance is seen at $2,604.25, followed by $2,618.20 and $2,632.15. On the downside, key support levels include $2,573.90, $2,560.25, and $2,547.22.

The 50-day EMA at $2,560.61 reinforces near-term support, while the 200-day EMA at $2,505.77 reflects the broader bullish trend.

A recent bullish engulfing candle adds to the positive outlook, suggesting potential for further gains. However, if gold breaks below the $2,585 pivot, selling pressure could intensify, shifting the short-term trend.