Gold (XAU) Daily Forecast: Will $2,626 Pivot Spark a Breakout or Pullback?

Market Overview

Gold prices surged to a one-week high on Tuesday, trading near $2,622 per ounce, as a softer U.S. dollar provided support. The dollar’s retreat, attributed to profit-taking after last week’s strong rally, made bullion more affordable for holders of other currencies.

“Recent market movements are largely technical, influenced by an overbought U.S. dollar,” said Kyle Rodda, financial market analyst at Capital.com. A weaker dollar often benefits gold, a non-yielding asset, by lowering its cost globally.

Fed Rate Cut Speculations in Focus

Investor attention is now firmly on the Federal Reserve, with several officials scheduled to speak this week. Markets are closely monitoring their comments for insights into the likelihood of further interest rate cuts in December.

Traders currently see a 58.9% probability of a 25-basis-point rate cut next month, compared to 41.1% odds of rates remaining steady, according to CME’s FedWatch Tool. The Fed has already reduced rates by 75 basis points since September, but strong U.S. economic data has fueled uncertainty about whether the easing cycle will continue.

Geopolitical Risks and Gold’s Appeal

Geopolitical tensions also provided a tailwind for gold. Russia launched its largest airstrike on Ukraine in nearly three months over the weekend, severely impacting critical infrastructure. While geopolitical uncertainties often boost demand for safe-haven assets like gold, analysts noted that recent gains were primarily driven by U.S. dollar dynamics and rate expectations.

The U.S. labor market remains tight, though inflationary pressures have moderated compared to 2022 and 2023. “Non-yielding assets like gold thrive in lower interest rate environments and amid geopolitical instability,” noted San Francisco Fed economists in a recent report.

Short-Term Forecast

Gold is poised near $2,622, with $2,626.46 acting as a pivot. A breakout could test $2,644, while failure risks $2,608 support. Federal Reserve comments remain critical for direction.

Gold Prices Forecast: Technical Analysis

Gold is trading at $2,622.23, up 0.39% as traders navigate a tight technical range on the 4-hour chart. The pivot point at $2,626.46 serves as a critical decision zone.

A breakout above this level could open the door to resistance levels at $2,644.62, $2,659.03, and $2,675.82, while a failure to sustain above the pivot risks a pullback toward immediate support at $2,608.29 and further downside targets at $2,591.38 and $2,575.41.

The 50-day EMA sits below at $2,598.03, offering dynamic support, while the 200-day EMA at $2,650.02 reinforces resistance above. Notably, a double-top pattern near the $2,626 area signals potential selling pressure. Expect a sharp directional move on a break of this key level.