Gold (XAU) Daily Forecast: Will $2,630 Resistance Break with CPI Data in Focus?

Market Overview

Gold prices edged higher on Thursday, recovering from $2,606 to $2,612, despite the US dollar reaching an eight-week high.

The yellow metal’s rebound can be attributed to growing safe-haven demand amid heightened geopolitical tensions and uncertainty in financial markets.

Gold Finds Support Despite Strong Dollar

The recent surge in gold prices comes against the backdrop of escalating tensions in the Middle East, which have increased safe-haven buying. Traders are also positioning themselves ahead of the upcoming US Consumer Price Index (CPI) report, which could shape expectations for future Federal Reserve (Fed) rate decisions.

While the dollar’s strength has traditionally been a headwind for gold, the metal has shown resilience. This suggests that some investors are hedging against ongoing geopolitical risks, despite the dollar’s upward trajectory.

The Dollar Index (DXY) rose to its highest level since mid-August, but the impact on gold remained limited.

Fed Rate Outlook and Market Sentiment

The US Federal Reserve’s September meeting minutes revealed a mixed sentiment among policymakers. A majority favored a 50 basis point rate cut, citing progress in curbing inflation towards the 2% target.

However, a few members advocated for a smaller 25 basis point cut due to concerns about solid economic growth and low unemployment rates.

Dallas Fed President Lorie Logan expressed caution regarding the economic outlook, suggesting a preference for more measured rate cuts in the future. Similarly, Boston Fed President Susan Collins reiterated the need for a flexible, data-driven approach to monetary policy.

Despite these mixed signals, analysts believe that expectations for smaller rate cuts could limit the dollar’s upside, providing support for gold. The metal’s resilience, even amid a bullish dollar, indicates sustained safe-haven demand from investors seeking to protect against economic uncertainties.

Short-Term Forecast

Gold prices show resilience above $2,605, despite a strong US dollar. A break above $2,630 could lead to further gains, while a dip below $2,605 risks downside momentum.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading at $2,612.23, up 0.17% for the day, indicating modest bullish momentum. Prices are hovering just below the 50-day Exponential Moving Average (EMA) of $2,629.25, which serves as an immediate resistance level.

A break above $2,630 could signal further upside potential towards $2,635 and $2,642. However, on the downside, Gold is finding solid support at $2,605, reinforced by a triple-bottom formation—a classic bullish pattern.

If prices dip below this support level, we may see sharp selling pressure, potentially targeting the next support levels at $2,594 and $2,585. Overall, the near-term outlook remains cautiously bullish above $2,605, but failure to hold this support could lead to renewed downside risks.