Gold (XAU) Daily Forecast: Steady at $2,314; Is There Upside Ahead?

By:

Arslan Ali

Updated: May 9, 2024, 06:46 GMT+00:00

Key Points:

Gold prices hold steady at $2,314 per ounce amid high US rates and Middle East tensions.
Despite Fed's hawkish stance, robust demand in Asia supports gold's market position.
Upcoming Fed speeches and unemployment claims data crucial for gold's short-term price direction.

In this article:

Gold

-0.68%

Market Overview

Gold prices (XAU/USD) remain subdued at $2,314 per ounce amid persistently high U.S. interest rates and geopolitical tensions in the Middle East. Despite being viewed as a safe haven, gold has not benefited significantly from the evolving situations, including the potential de-escalation between Israel and Hamas.

Geopolitical Tensions and Fed Policies Weigh on Gold Prices

Despite a lack of major economic announcements mid-week, gold trades with a positive but constrained outlook. The strength of the U.S. dollar, marked by a 0.5% rise in the U.S. Dollar Index to 103.2, and recent hawkish commentary from Federal Reserve officials underscore expectations that U.S. interest rates may remain elevated for an extended period.

The opportunity cost of holding non-yielding assets increases with this scenario, making it bearish for gold. Despite market speculation, statements from regional Fed leaders, including Boston Fed President Susan Collins, suggest that inflation control remains a priority and that rate cuts are not imminent. The likelihood of a September rate cut has decreased from 85% to just under 55%.

Central Bank Demand and Consumer Sentiment Impacting Gold

On the demand side, gold continues to see substantial purchases from central banks, with the People’s Bank of China increasing its reserves by 60,000 troy ounces last month, signalling sustained institutional confidence in the metal.

Moreover, robust demand from over-the-counter markets and consumers in Asia, particularly in China and India, provides a counterbalance to the pressures from U.S. monetary policy.

Upcoming economic indicators, such as the U.S. Initial Jobless Claims expected around 220,000 and the Consumer Sentiment Index, projected to drop to 76.0 from 77.2, will provide further insights into the economic conditions influencing gold’s trajectory.

Looking ahead, the gold market is bracing for more Federal Reserve communications and critical consumer price index data.

Gold Prices Forecast

Gold – Chart

Gold price today is $2,314.13, marking a 0.27% increase. Currently, the metal is trading above its pivot point of $2,307.29 and just below the 50-day Exponential Moving Average (EMA) of $2,316.24, which suggests a tight trading range. Immediate resistance levels are at $2,336.20, $2,351.65, and $2,369.37.

Support levels are more distinctly set at $2,294.59, $2,277.60, and $2,260.34, providing cushions that could stabilize price drops. The technical configuration includes a downward trendline posing resistance near $2,320, while a double bottom pattern around the $2,300 mark offers strong support.

This setup suggests that maintaining above $2,307 could favor bulls, but slipping below could trigger a sharp decline in prices.

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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