Gold (XAU) Daily Forecast: Prices Hold at $2,377; US CPI Ahead

By:

Arslan Ali

Published: Jul 11, 2024, 06:00 GMT+00:00

Key Points:

Gold rallies to $2,386, driven by Middle East conflict.
Fed’s cautious stance on inflation may challenge gold prices.
Traders await Powell’s testimony and CPI data for market direction.

In this article:

Gold

-0.68%

Market Overview

Gold (XAU/USD) maintained its upward trend, reaching an intraday high of $2,386 and staying strong around $2,377. The bullish rally was driven by concerns over the escalating conflict in the Middle East, boosting safe-haven assets like gold.

Jerome Powell’s cautious stance on inflation and the need for stronger data to consider rate cuts could challenge gold prices. Investors anticipate a tight monetary policy environment, which typically impacts non-yielding assets like gold unfavorably.

Federal Reserve’s Cautious Stance and CPI Data Impact on Gold

Despite the Federal Reserve’s cautious stance during Tuesday’s testimony before Congress, the US dollar struggled to gain momentum. Traders are now focusing on the upcoming testimony by Federal Reserve Chairman Jerome Powell, along with speeches from Fed officials Michelle Bowman and Austan Goolsbee on Wednesday.

Investors will also closely watch the release of the US Consumer Price Index (CPI) data, with forecasts indicating that Core CPI will remain steady at 3.45% year-over-year for June and 0.2% month-over-month.

Non-yielding assets like gold could face challenges as Powell reiterated the Fed’s cautious approach, stating that first-quarter data did not bolster confidence in the inflation outlook necessary for rate cuts.

Powell emphasized that a rate cut would be premature without clear evidence that inflation is moving sustainably towards the Fed’s 2% target.

Geopolitical Tensions in Gaza Boost Safe-Haven Demand for Silver and Gold

Concerns about escalating conflict in the Middle East are driving up safe-haven demand for silver and gold. Israeli forces continued their offensive in northern and central Gaza, including airstrikes on a tent encampment, as reported by Reuters. Hamas stated that the recent Israeli attacks resulted in over 60 Palestinian casualties on Tuesday.

These actions pose challenges to ongoing ceasefire negotiations, scheduled to resume in Doha on Wednesday, prolonging the Gaza conflict and supporting gold prices amid heightened uncertainty.

Short-term Forecast

Gold prices are expected to remain bullish above $2,370.22 amid ongoing Middle East tensions, with immediate resistance at $2,381.39. However, cautious Fed signals could introduce volatility.

Gold Prices Forecast: Technical Analysis

Gold – Chart

Gold (XAU/USD) is trading at $2,376.98, up 0.34% in the latest session. The two-hour chart highlights key levels, with the pivot point at $2,370.22 serving as a critical support. Immediate resistance is at $2,381.39, followed by $2,393.00 and $2,402.46. On the downside, immediate support is at $2,361.10, with further support at $2,349.76 and $2,340.05.

Technical indicators show a bullish trend, with the 50-day EMA at $2,366.94 and the 200-day EMA at $2,348.09. The outlook remains bullish above $2,370.22; a break below this level could trigger a sharp sell-off.

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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