Gold (XAU) Daily Forecast: Hovering Near $2,455—Will Geopolitical Tensions Drive Gains?

By:

Arslan Ali

Published: Aug 16, 2024, 06:41 GMT+00:00

Key Points:

Gold prices are pressured near $2,455, driven by easing US recession fears.
Geopolitical tensions elevate gold as a safe-haven, rebounding prices amid global conflicts.
Traders eye upcoming US macro data, including Building Permits and Consumer Sentiment.

In this article:

Gold

-0.68%

Market Overview

Gold prices (XAU/USD) are under pressure, hovering around $2,455 after reaching an intra-day low of $2,450.82. The decline is mainly due to easing US recession fears and a shift to risk-on market sentiment, reducing demand for safe-haven assets like gold.

However, potential escalation in Middle East tensions and expectations of a Federal Reserve policy easing limit further downside.

Traders are now focusing on upcoming US macroeconomic data—Building Permits, Housing Starts, and the Preliminary Michigan Consumer Sentiment Index—for short-term trading opportunities.

US Economic Strength and Fed Rate Cut Expectations Weigh on Gold Prices

Despite strong economic data, the US dollar failed to gain significant traction as markets fully priced in a 25 basis point (bps) rate cut at the upcoming Federal Reserve meeting in September.

This anticipation caused a slight pullback in US Treasury yields, limiting the dollar’s ability to build on recent gains.

Notable figures include a 1% rise in July retail sales and better-than-expected initial jobless claims of 227,000 for the week ending August 10.

The robust economic data and labor market conditions have limited gold’s upside, reinforcing expectations for a Fed rate cut, which typically pressures non-yielding assets like gold.

Escalating Geopolitical Tensions Drive Gold Prices Higher

Ongoing conflicts in the Middle East and the Russia-Ukraine war pushed gold prices higher on Friday. Concerns mounted over Iran’s potential response to the assassination of Hamas leader Ismail Haniyeh in Tehran, coinciding with renewed Gaza ceasefire talks in Doha.

Meanwhile, Russia strengthened its border defences after Ukraine’s largest attack on Russian territory since World War II. Violence also escalated in Gaza and the West Bank, where Israeli settlers targeted Palestinian communities.

These geopolitical tensions increased gold’s appeal as a safe-haven asset, leading to a rebound in prices.

Short-Term Forecast

Gold faces resistance near $2,477.78, with strong support at $2,443.31. A break above resistance could lead to gains while dropping below support risks declines.

Gold Prices Forecast: Technical Analysis

Gold – Chart

Gold (XAU/USD) is currently trading at $2,455.09, down 0.15% daily. The price is consolidating within a broad range, with immediate resistance at $2,477.78, marked by a triple top formation. This resistance level is a significant barrier to further upside movement.

On the downside, strong support is found near the $2,443.31 pivot point, reinforced by the 50-day EMA at $2,441.81. The 200-day EMA at $2,408.69 also suggests a bullish outlook if the price holds above these levels.

If gold manages to break above $2,477.78, the potential for a move toward $2,500 or higher is strong. However, a break below $2,444 could trigger a sharp decline.

About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

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