Gold (XAU) Daily Forecast: Dollar Strength Pressures Prices as Gold Hits $2,550 Low

Market Overview

Gold prices (XAU/USD) have dropped to $2,550, reaching their lowest level since mid-September. The primary driver behind this decline is the US dollar’s recent strength, fueled by expectations of pro-growth policies from President-elect Donald Trump.

US Dollar Strength Driven by Inflation Expectations

Investors are optimistic about Trump’s anticipated fiscal policies, such as tariffs and tax cuts, which are expected to drive inflation higher.

This sentiment has strengthened the US dollar to levels not seen since November 2023, making gold more expensive for international buyers and reducing its appeal as a safe-haven asset.

Higher Treasury yields have further boosted the dollar, adding pressure on gold prices.

CPI Data Supports a Cautious Fed Approach

The US Consumer Price Index (CPI) data for October pointed to slower progress in curbing inflation, which may influence the Federal Reserve’s stance on future rate cuts.

October’s CPI rose by 0.2% month-over-month, with an annual increase of 2.6%. Core CPI, which excludes volatile food and energy prices, increased by 0.3% in October and 3.3% year-over-year.

These numbers have raised expectations of a potential Fed rate cut in December, with market odds now above 80%.

Fed Officials Warn of Inflation Risks

Several Federal Reserve officials have expressed caution over inflation. Dallas Fed President Lorie Logan highlighted the need for a careful approach, acknowledging the progress made in lowering inflation but advising vigilance.

Similarly, St. Louis Fed President Alberto Musalem noted that inflation risks could complicate the Fed’s rate policy, especially with Trump’s potential inflationary policies adding pressure.

Key Economic Events Ahead

Traders are closely watching the upcoming US Producer Price Index (PPI) and Fed Chair Jerome Powell’s speech for additional policy clues. These events could further shape the market’s inflation expectations and influence the Fed’s next moves.

Short-Term Forecast

Gold faces continued pressure, trading near $2,556, with key support at $2,529. A break below could drive further declines, while holding above $2,551 might trigger a rebound.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading around $2,556, down 0.65% for the session, as sellers pressure the price near its pivot point at $2,551.66. Immediate support is seen at $2,529, while breaking below this could drive the price down toward $2,506 or even $2,483.

Conversely, if gold maintains support above the $2,551 pivot, we could see a rebound toward resistance levels at $2,574, $2,604, and potentially $2,627.

The 50-day EMA, positioned at $2,650, indicates a broader downtrend. Notably, gold is near an oversold condition, which, along with a possible double-bottom pattern, suggests potential upward movement if support holds.