Gold (XAU) Daily Forecast: Key Support at $2,500 Holds as Fed Rate Cut Speculation Fades

Market Overview

Gold prices (XAU/USD) dropped to $2,500.85 during Tuesday’s Asian session as the US dollar gained strength, driven by fading hopes for a 50-basis-point rate cut by the Federal Reserve.

Investors have scaled back expectations for a large interest rate cut following last Friday’s mixed US jobs report, putting pressure on gold as the dollar strengthens.

The USD Index (DXY), which measures the dollar against a basket of major currencies, is approaching last week’s monthly high, reducing gold’s appeal as a non-yielding asset.

Strengthening Dollar and Fed Rate Speculation Weigh on Gold

The US dollar’s recent strength, bolstered by diminished hopes for a major rate cut, has led to gold’s decline. The mixed US jobs report revealed a lower-than-expected increase in employment, but wage growth remained strong, reducing the likelihood of a 50-basis-point cut.

According to CME Group’s FedWatch tool, traders now see a 71% chance of a 25-basis-point cut at the Federal Reserve’s September 17-18 meeting, while only 29% expect a larger cut.

Upcoming US economic data, including the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday, will offer further clues on the Fed’s next move.

Fed officials, such as New York Fed President John Williams and Governor Christopher Waller, have emphasized that future policy decisions will depend heavily on economic data.

Equity Market Optimism and Chinese Trade Data Add Pressure

Investor optimism in equity markets has further weakened demand for gold. Stronger Chinese trade data, showing a trade surplus increase from CNY 601.98 billion to CNY 649.34 billion in August, has boosted global market sentiment.

As exports rose by 8.4%, investors are shifting focus away from safe-haven assets like gold and moving toward stocks, adding to the downward pressure on gold prices.

With positive equity momentum and a stronger US dollar, gold may continue to struggle in the near term.

Short-Term Forecast

Gold is consolidating near $2,500, with immediate support at $2,485. A break below this level could lead to sharper declines, but bullish momentum remains above $2,500.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD is trading at $2,504.03, down 0.21% in the 4-hour timeframe. The metal is consolidating within a narrow range, hovering just above the pivot point of $2,499.11. Immediate resistance sits at $2,511.34, with further resistance levels at $2,529.14 and $2,542.28.

On the downside, key support levels lie at $2,485.44 and $2,471.90, with stronger support at $2,451.91. The 50-day Exponential Moving Average (EMA) at $2,502.84 acts as near-term support, while the 200-day EMA at $2,470.53 provides stronger structural support.

The upward trendline suggests a bullish bias, but a break below $2,500 could trigger a sharper selling trend. For now, gold remains bullish above $2,500.