Gold (XAU) Daily Forecast: Price Battles Below $2,425 – Bearish Reversal Ahead?

By:

Arslan Ali

Published: Aug 9, 2024, 06:49 GMT+00:00

Key Points:

Gold prices drop to $2,421, driven by strong US labor market data and easing fears.
Fed rate cut speculation supports gold, offsetting gains in US equities and dollar strength.
Middle East tensions continue to drive demand for safe-haven assets, bolstering gold prices.

In this article:

Gold

-0.68%

Market Overview

Gold prices (XAU/USD) edged lower to around $2,421, with an intra-day low of $2,419.44. The decline was driven by a stronger-than-expected US labor market report, easing recession fears and reducing demand for safe-haven assets like gold.

However, this drop may be temporary, as expectations of a Federal Reserve rate cut in September could spark a rebound. Meanwhile, dovish Fed expectations are pushing US Treasury bond yields lower, weakening the US dollar and potentially supporting XAU/USD.

Geopolitical tensions in the Middle East also continue to underpin gold prices, limiting further losses.

Gold Prices Gain Support from US Data and Fed Rate Cut Speculation

Strong US labor market data released Thursday eased recession fears and boosted investor confidence, diminishing gold’s appeal as a safe-haven asset. This sparked a rally in US equities, limiting gold’s gains.

However, markets have priced in a 25-basis point Fed rate cut in September, with speculation of a 50-basis point cut, offering support to gold prices.

Expectations of a dovish Fed stance have also lowered US Treasury yields and weakened the US dollar, further aiding XAU/USD. Additionally, 233,000 initial jobless claims, better than expected, eased economic concerns, bolstering gold’s outlook.

Middle East Tensions Boost Safe-Haven Demand for Gold Amid Market Uncertainty

Escalating tensions in the Middle East are impacting market sentiment, driving demand for safe-haven assets like gold (XAU/USD). The recent assassination of Hamas chief Ismail Haniyeh in Tehran has increased the risk of retaliatory strikes by Iran on Israel.

Meanwhile, Israel’s military actions in Gaza, including strikes on schools and a refugee camp, have caused significant casualties.

Although Israel has agreed to ceasefire talks on August 15, Hamas has yet to respond. This ongoing conflict continues to support gold prices amid market uncertainty.

Short-Term Forecast

Gold (XAU/USD) is likely to face downward pressure, with prices struggling near $2,421. A break above $2,430 could trigger bullish momentum, but the immediate trend remains bearish.

Gold Prices Forecast: Technical Analysis

Gold – Chart

Gold (XAU/USD) is trading at $2,421.52, down 0.24%. The 4-hour chart shows the price below the pivot point at $2,429.62, indicating potential bearish momentum. Immediate resistance is at $2,452.90, with further resistance levels at $2,473.87 and $2,492.08.

On the downside, support is found at $2,408.93, followed by $2,380.87 and $2,364.29. The 50-day EMA at $2,410.30 supports the bearish outlook, while the 200-day EMA at $2,392.38 provides additional support.

A sustained break above $2,430 could shift momentum to the upside, while maintaining below this level may extend the bearish trend.

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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