Gold (XAU) Daily Forecast: Key Support at $2,650 – Will Profit-Taking Continue?

Market Overview

Gold prices (XAU/USD) retreated from their record high of $2,655 during the Asian session on Wednesday as investors took profits after an extended rally. The price correction comes as gold appeared overbought, prompting cautious sentiment in the market.

Simultaneously, China’s recent stimulus measures have created a “risk-on” environment, luring investors into higher-yield assets and dampening immediate demand for gold’s safe-haven appeal.

Despite the recent dip, analysts do not foresee a sharp decline in gold prices. The Federal Reserve’s anticipated easing measures continue to exert pressure on the U.S. dollar, bolstering gold’s attractiveness.

Additionally, ongoing geopolitical tensions in the Middle East and U.S. political uncertainty ahead of the November elections sustain demand for gold.

Dollar Weakness and Economic Data Favor Gold

The U.S. dollar has been weakening due to expectations of further rate cuts from the Federal Reserve. According to the CME Group’s FedWatch Tool, markets are pricing in a 75% chance of a 50-basis point rate cut in November. A weakening dollar supports gold by lowering the opportunity cost of holding the non-yielding asset.

Additionally, recent U.S. economic data has contributed to dollar weakness. The Conference Board’s Consumer Confidence Index dropped to 98.7 in September, down from 105.6 in August, highlighting growing concerns about the U.S. economy. Manufacturing activity also showed a downturn, with the Richmond Fed’s composite manufacturing index slipping to -21 from -19.

Fed’s Powell and Economic Data in Focus

Traders are now awaiting key speeches by Fed officials, particularly Chair Jerome Powell’s address on Thursday, for clues on future monetary policy.

Additionally, Friday’s release of the U.S. Personal Consumption Expenditure (PCE) Price Index will be crucial in determining the dollar’s short-term direction and could influence future Fed decisions.

Geopolitical Risks Keep Gold Attractive

Geopolitical tensions, particularly in the Middle East, continue to push investors toward gold. Recent escalations in Israel and Lebanon have raised fears of a broader conflict, driving demand for safe-haven assets. U.S. political uncertainty leading up to the elections adds another layer of support for gold prices.

While China’s stimulus-driven “risk-on” sentiment may create short-term volatility, gold remains a strong choice for investors looking to hedge against global uncertainties.

Short-Term Forecast

Gold prices may experience near-term consolidation around $2,655. A break above $2,659 could trigger bullish momentum, while a dip below $2,652 risks further downside, maintaining a cautious market tone.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading at $2,655.29, down 0.06%, showing slight hesitation after recent gains. The pivot point at $2,659.47 is crucial—if prices break above this, it could signal more bullish momentum, with immediate resistance at $2,670.41, followed by $2,676.83 and $2,683.64.

On the downside, immediate support is at $2,652.42, with additional support levels at $2,647.13 and $2,641.52. The 50-day EMA at $2,638.12 and 200-day EMA at $2,595.91 offer strong medium- and long-term support.

A break below $2,652 could shift sentiment bearish while moving above $2,659 would likely trigger fresh buying interest.