Gold (XAU) Daily Forecast: Will $2,515 Support Hold Amid Strong Dollar Gains?

Market Overview

Gold (XAU/USD) extended its decline on Friday, falling to approximately $2,512 as the US Dollar (USD) rebounded sharply. The greenback’s strength followed robust economic data, including a stronger-than-expected GDP growth of 3.0% for Q2 and a decrease in Initial Jobless Claims to 231,000.

These figures have lowered the likelihood of a significant rate cut by the Federal Reserve (Fed) in September, making non-yielding assets like gold less attractive to investors.

All eyes are now on the upcoming US inflation data, specifically the core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred measure of inflation.

The index is expected to rise by 2.7% year-over-year in July, up from 2.6% in June. A lower-than-expected PCE reading could rekindle hopes for a rate cut, potentially providing some relief for gold prices.

Atlanta Fed President Raphael Bostic hinted that while rate cuts are possible if inflation cools further and unemployment rises, more data is needed to make a final decision.

Currently, markets estimate a 66% chance of a 25 basis points (bps) rate cut in September, with the probability of a larger cut diminishing after the latest GDP report.

Geopolitical Tensions May Renew Safe-Haven Demand for Gold

Amid economic concerns, geopolitical tensions are also influencing gold prices. Escalating conflicts in the Middle East and ongoing hostilities between Russia and Ukraine could drive investors towards safe-haven assets.

This week, Russia launched several air attacks on Ukraine, while tensions in the Middle East remained high. Although Israel has agreed to limited humanitarian pauses, the situation remains volatile.

These geopolitical developments could support gold prices, as investors seek stability in uncertain times. As the global situation remains fluid, gold may see renewed demand, balancing out the pressures from strong US economic data.

Short-Term Forecast

Gold’s near-term outlook hinges on holding the $2,515 pivot. A break above $2,529.03 could lead to gains, while a dip below $2,515 risks triggering further downside pressure.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading at $2,516.49, down 0.19% on the day, but still holding above a critical pivot point at $2,515.

The price action is currently shaped by an ascending triangle pattern on the 4-hour chart, which generally signals a bullish outlook. Immediate resistance lies at $2,529.03, followed by $2,541.49 and $2,555.86.

A break above these levels could pave the way for further gains. On the downside, support is found at $2,500.16, with deeper levels at $2,486.23 and $2,470.51.

The 50-day EMA at $2,513.32 and the 200-day EMA at $2,485.32 also provide significant support, reinforcing the bullish sentiment as long as prices remain above $2,515.