Gold (XAU) Daily Forecast: Surge to $2,470 Amid Rate Cut Expectations

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Published: Jul 18, 2024, 06:48 GMT+00:00

Key Points:

Gold surged to $2,469.94 due to expected Federal Reserve rate cut.
Trump's support for lower rates and tariffs boosts gold demand.
Lower rates weaken the dollar, making gold a safe-haven asset.

Gold (XAU) Daily Forecast: Surge to $2,470 Amid Rate Cut Expectations

Market Overview

The price of Gold (XAU/USD) surged to an intraday high of $2,469.94, driven by growing expectations of an impending interest rate cut by the Federal Reserve in September. Investors remain confident in the likelihood of this move, especially after comments from Fed Governor Christopher Waller suggesting the bank is nearing a decision on lowering rates.

Lower interest rates typically make non-yielding assets like gold more attractive to investors. Additionally, former President Donald Trump’s advocacy for tax reductions, lower interest rates, and increased tariffs have further supported gold prices.

This policy stance is seen as potentially inflationary and could weaken the dollar, making gold a more appealing safe-haven asset.

Fed’s Rate Cut Signals and US Economic Data in Focus

The Federal Reserve’s increasing optimism about inflation reaching its target has fueled expectations of potential interest rate cuts. Fed officials, including Governor Waller and President Barkin, have hinted at the possibility of rate reductions. Market forecasts now predict a 93.5% probability of a rate cut in September.

However, a stronger US Dollar, supported by improved Treasury yields, has somewhat restrained Gold’s upward movement. Fed Board member Dr. Kugler emphasized the need for more data to confirm the need for rate cuts, while Chair Powell’s confidence in inflation approaching the target suggests potential delays in future cuts.

US Retail Sales for June remained steady at $704.3 billion, indicating consistent consumer spending. Despite a stronger dollar, this stability, coupled with the Fed’s cautious stance on rate cuts, has contributed to Gold’s recent price increase. Investors are turning to gold as a hedge against uncertainties surrounding future Fed actions and economic growth prospects.

Trump’s Economic Policies and Fed Influence on Gold Demand

Former President Donald Trump recently voiced support for tax cuts, lower interest rates, and increased tariffs during a meeting with House Republicans, according to The New York Times. These policies could spur inflation and weaken the US dollar, boosting demand for gold.

In a Bloomberg News interview, Trump cautioned Fed Chair Jerome Powell against cutting rates before the November presidential election. However, Trump suggested that if re-elected, he would support Powell staying in his role at the Federal Reserve, as long as Powell’s decisions aligned with his preferences.

Short-Term Forecast

Gold prices surged to an intraday high of $2,469.94, driven by expectations of an impending Federal Reserve rate cut. Investor confidence remains strong amid Fed Governor Christopher Waller’s comments hinting at a near-term decision.

Gold Prices Forecast: Technical Analysis

Gold – Chart

Gold (XAU/USD) is currently trading at $2466.29, up 0.28% for the day. The 4-hour chart indicates a bullish trend, with the price trading above both the 50-day and 200-day exponential moving averages (EMAs) of $2440.26 and $2388.10, respectively.

A key level to watch is the pivot point at $2462.54. If gold can maintain this level, it could propel prices towards the immediate resistance of $2484.03, followed by $2495.38 and $2508.05.

However, a break below $2462.54 could trigger a selloff towards support levels of $2451.33, $2434.87, and $2420.02.

About the Author

Arslan Aliauthor

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.