Gold (XAU) Daily Forecast: Prices Drop Below $2,375; Major Sell-off Looming?

By:

Arslan Ali

Published: Jul 25, 2024, 06:18 GMT+00:00

Key Points:

Gold (XAU/USD) prices dropped to $2,373 amid US dollar selling pressure.
Investors await the Federal Reserve's policy signals, impacting market sentiment.
Key US macroeconomic data, including Q2 GDP and PCE, could influence gold prices.

In this article:

Gold

-0.68%

Market Overview

Despite renewed selling pressure on the US dollar, gold prices (XAU/USD) have struggled to maintain bullish momentum, recently dropping to $2,373 and hitting an intra-day low of $2,366.90. This decline reflects investor caution, with many awaiting clearer signals on the Federal Reserve’s policy direction.

Focus is now on key US macroeconomic data, including the Advance Q2 GDP report on Thursday and the Personal Consumption Expenditures (PCE) Price Index on Friday.

The potential for a Fed rate cut in September is also affecting the US dollar, which remains below a two-week high from Wednesday. This situation supports gold prices, as the metal benefits from its safe-haven status amid a risk-off sentiment seen in weaker global equity markets.

Gold Prices Stabilize Amid Risk-Off Sentiment and Dovish Fed Expectations

Gold prices fell to a two-week low on Thursday due to increased selling activity. However, further declines seem unlikely given the prevailing risk-off sentiment and dovish expectations for the Federal Reserve. Disappointing global flash PMIs have heightened concerns about an economic slowdown, enhancing gold’s appeal as a safe haven.

The HCOB survey indicated economic weakening in the Eurozone, with a deepening manufacturing downturn and a slowdown in the service sector. Conversely, the US showed robust business activity in July, supported by the services sector, despite some manufacturing easing.

Former New York Fed President William Dudley has called for a rate cut as soon as next week due to recession concerns, increasing expectations for the Federal Reserve’s policy easing. Markets have fully priced in a 25 basis point cut in September, with additional reductions anticipated in November and December.

US political uncertainty is also likely to support gold prices (XAU/USD) as traders await key US economic data, including the Advance Q2 GDP report on Thursday and the Personal Consumption Expenditures (PCE) Price Index. Despite recent declines, gold prices should stabilize due to risk-off sentiment, dovish Fed expectations, and economic concerns.

Short-Term Forecast

Gold (XAU/USD) prices, currently at $2,373.57, face immediate resistance at $2,397.40. The potential for a Fed rate cut in September supports gold amid economic uncertainties.

Gold Prices Forecast: Technical Analysis

Gold – Chart

Gold (XAU/USD) is trading at $2,373.57, down 0.96% as of the latest session. On the 4-hour chart, the pivot point is at $2,378.29. Immediate resistance levels are $2,397.40, $2,422.04, and $2,440.04. Immediate support levels are $2,356.14, $2,338.97, and $2,319.03.

Technical indicators show the 50-day EMA at $2,409.36 and the 200-day EMA at $2,376.96. The current price below both moving averages suggests bearish momentum. The outlook remains bullish above $2,375; however, a break below this level could lead to a sharp selling 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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