Gold (XAU) Daily Forecast: Rising to $2,434 as Middle East Tensions Escalate

Looking ahead, investors are cautious, awaiting key US inflation data before making significant bets on gold. The US Producer Price Index (PPI) will be released on Tuesday, followed by the Consumer Price Index (CPI) on Wednesday.

Additionally, Thursday’s US Retail Sales data will influence expectations about the Fed’s policy direction, impacting USD demand and potentially driving XAU/USD movements. Geopolitical developments will also shape the near-term trajectory of gold.

US Dollar Rises Despite Fed Rate Cut Speculation, Key Inflation Data Awaited

Despite expectations of a 25-basis point Fed rate cut in September, with some considering a 50-basis point cut, the US dollar is gaining momentum. However, these gains may be short-lived due to the anticipated rate cut and risk-on sentiment in equity markets.

Typically, positive equity market sentiment challenges this safe-haven asset, but several factors continue to support the dollar and limit downside risks.

Fed Governor Michelle Bowman noted on Sunday that the Fed might not be ready to cut rates in September, citing inflation risks and a strong labor market. However, this hasn’t led to significant US dollar buying or meaningfully impacted gold prices.

Middle East Tensions Boost Gold Prices Amid Rising Regional Conflict Risks

Ongoing conflicts in the Middle East have significantly increased the risk of a broader regional war. Early Monday, the Israel Defense Forces (IDF) intercepted around 30 projectiles crossing from Lebanon into northern Israel. Israel’s Air Force and Military Intelligence are on high alert due to potential threats from Western Iran.

Hamas leaders are urging mediators to rely on previous cease-fire agreements with Israel rather than starting new talks. Meanwhile, the US is boosting its regional presence by deploying an additional guided missile submarine in response to rising tensions.

These developments are increasing the likelihood of a larger conflict and are providing support to gold prices, particularly as the market anticipates a dovish stance from the Federal Reserve.

Short-Term Forecast

Gold is expected to maintain its upward momentum, with support at $2,429 and potential resistance at $2,453. Caution is advised as key U.S. inflation data releases this week could trigger significant market movements. A break below $2,429 may lead to increased selling pressure.