Gold (XAU) Daily Forecast: Nears $2400 as Fed Rate Cut Hopes Influence Prices

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Published: Jul 23, 2024, 06:08 GMT+00:00

Key Points:

Gold falls to $2397.44, hits intra-day low of $2394 on positive market sentiment.
Fed expected to cut rates in September, supporting market sentiment and pressuring gold.
Biden's exit raises Trump's chances, boosting hopes for relaxed regulations and impacting gold.

Gold (XAU) Daily Forecast: Nears $2400 as Fed Rate Cut Hopes Influence Prices

Market Overview

Despite a weaker US dollar and dovish Federal Reserve expectations, gold (XAU/USD) failed to sustain its bullish trend, falling to $2397.44 and hitting an intra-day low of $2394. This decline was driven by positive market sentiment, buoyed by unexpected interest rate cuts from the People’s Bank of China (PBoC).

Market participants anticipate that the Fed will begin lowering borrowing costs in September, with expectations of two more rate cuts by year-end. This outlook has supported market sentiment and pressured safe-haven assets like gold.

Additionally, US President Joe Biden’s withdrawal from the 2024 Presidential election has increased the likelihood of Donald Trump becoming the next President, raising hopes for a more relaxed regulatory environment.

Gold Prices Rise Amid US Dollar Weakness and Key Economic Data Releases

The broad-based US dollar has lost momentum, edging lower due to dovish Federal Reserve expectations. Market participants anticipate the Fed will start lowering borrowing costs in September, with the possibility of two more rate cuts by year-end. This outlook has led to a decline in US Treasury bond yields, putting pressure on the dollar and supporting gold prices.

Looking ahead, traders will focus on Tuesday’s US economic data, including Existing Home Sales and the Richmond Manufacturing Index, for short-term trading opportunities. However, the main focus will be Thursday’s Advance US Q2 GDP report and Friday’s US Personal Consumption Expenditures (PCE) Price Index. Additionally, this week’s flash PMIs will provide a clearer outlook on global economic trends.

Trump’s Potential Presidency and Its Impact on Gold Prices: Biden Withdraws

Investors showed little reaction to President Joe Biden ending his re-election campaign, expecting the US equity market to benefit from Trump’s proposed policies.

A second Trump presidency is anticipated to be more inflationary, leading to higher US Treasury bond yields. This expectation of higher yields and inflation could push investors away from gold (XAU/USD), leading to a decline in gold prices.

PBoC Rate Cuts Boost Global Market Sentiment, Pressuring Gold Prices

Global market sentiment has turned bullish due to unexpected interest rate cuts by the People’s Bank of China (PBoC). The PBoC lowered the one-year loan prime rate, the five-year loan prime rate, and the seven-day reverse repo rate by 10 basis points each, to 3.35%, 3.85%, and 1.7%, respectively.

These cuts follow disappointment over the lack of short-term stimulus from the recent Third Plenary meeting. While the cuts have boosted global risk sentiment, they have also acted as a headwind for gold, reducing its appeal as a safe-haven asset and putting downward pressure on its price.

Short-Term Forecast

Gold (XAU/USD) at $2397.44, up 0.08%. Bearish below $2401, with support at $2383.82. Bullish above $2401, with resistance at $2411.87.

Gold Prices Forecast: Technical Analysis

Gold – Chart

Gold (XAU/USD) is trading at $2397.44, up 0.08%. On the 2-hour chart, the pivot point is set at $2401.00. Immediate resistance levels are at $2411.87, $2425.64, and $2439.69, indicating potential upward movement if these levels are breached. On the downside, immediate support is found at $2383.82, followed by $2370.13 and $2355.05.

Technical indicators present a mixed outlook. The 50-day EMA stands at $2417.12, and the 200-day EMA is at $2396.12. These figures suggest a bearish outlook below the pivot point of $2401. A break above this level could shift sentiment to a more bullish stance.

About the Author

Arslan Aliauthor

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.