Gold (XAU) Daily Forecast: Will $2,571 Pivot Hold Amid Strong Dollar Pressure?

These figures indicate ongoing inflationary pressures, which typically reduce gold’s appeal since higher inflation can lead to interest rate hikes, increasing the opportunity cost of holding non-yielding assets like gold.

Middle East Tensions Offer Limited Support

While geopolitical tensions in the Middle East and the ongoing Russia-Ukraine conflict traditionally support gold as a safe-haven asset, market reactions have been subdued.

Investors appear focused on the strength of the US Dollar and potential shifts in Fed policy as primary market drivers.

“Gold’s safe-haven appeal remains, but the strong dollar and inflation signals are currently outweighing geopolitical concerns,” noted David Liu, a market strategist at FX Consult.

Upcoming Data and Fed Signals

Investors are keenly awaiting the release of US Retail Sales data and the NY Empire State Manufacturing Index for October, along with Industrial Production numbers. Remarks from Fed officials Susan Collins and John Williams later today may also provide insight into the Fed’s stance on inflation and interest rates.

Federal Reserve Bank of St. Louis President Alberto Musalem recently emphasized the challenges of cutting rates amid inflation, while Fed President Jeffrey Schmid dismissed expectations for a return to near-zero rates, calling such hopes “unrealistic.”

The stronger dollar and persistent inflation concerns, coupled with the Fed’s cautious approach, could continue to weigh on gold prices. As higher inflation often leads to higher rates, gold’s attractiveness as an investment remains subdued in the current environment.