Gold (XAU) Daily Forecast: Dollar Stalls, Can Prices Break Above $2,590 Pivot?

Market Overview

Gold prices climbed over 1% on Monday, reversing some of last week’s losses, as the dollar’s rally stalled and investors turned their focus to forthcoming Federal Reserve commentary.

The price of gold, which had faced sharp sell-offs in prior sessions, found relief as the U.S. dollar index remained flat after surging 1.6% the previous week.

A weaker dollar typically boosts gold’s appeal to foreign buyers by making it less expensive in other currencies.

Fed Commentary in Focus

This week, at least seven Federal Reserve officials are slated to speak, offering key insights into the central bank’s stance on interest rates. Despite resilient U.S. economic indicators, including slightly stronger-than-expected October retail sales data, uncertainty lingers over the Fed’s rate strategy.

Friday’s data showed that retail sales rose by 0.1% in October, exceeding economists’ estimates and underscoring the economy’s underlying strength. However, persistent inflationary pressures may temper the Fed’s willingness to pivot toward rate cuts.

“Markets haven’t fully priced in a potential January rate hold,” added Jun Rong, suggesting that recalibrations in expectations could weigh on gold’s performance.

Higher Rates Dampen Bullion’s Appeal

Gold’s upward momentum remains constrained by high U.S. interest rates, which reduce the allure of non-yielding assets like gold.

The Federal Reserve’s recent tightening cycle has driven real yields to multi-year highs, putting bullion under sustained pressure.

Geopolitical Developments Offer Limited Support

Beyond monetary policy, geopolitical headlines have also influenced investor sentiment. Reports emerged on Monday that the Biden administration has approved Ukraine’s use of U.S.-manufactured weapons to strike deeper into Russian territory.

However, the gold market reaction to the news has been muted, as traders primarily focus on macroeconomic and monetary factors.

Short-Term Forecast

Gold prices are expected to remain range-bound in the short term, with immediate resistance at $2,612.24 and support at $2,561.53. A break above $2,590.93 could fuel bullish momentum.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is currently trading at $2,585.92, up 0.91% on the day, showing signs of recovery but remaining below its key pivot point at $2,590.93. On the 4-hour chart, immediate resistance lies at $2,612.24, while stronger barriers await at $2,627.62 and $2,649.34. Conversely, immediate support rests at $2,561.53, with subsequent levels at $2,538.40 and $2,511.84.

The technical landscape reveals a precarious balance. The 50-day EMA sits just below current prices at $2,589.11, while the 200-day EMA at $2,654.91 highlights a broader bearish tilt. Traders should watch for a downward trendline and a “tweezer’s top” pattern forming near the pivot, signaling potential resistance.

A close above $2,590.93 could spark bullish momentum, while failure to hold this level may sustain bearish pressure.