Gold (XAU) Daily Forecast: Will a Break Below $2,560 Trigger Further Declines?

Market Overview

Gold prices (XAU/USD) dipped to $2,576 during the Asian trading session, marking the end of a three-day rally. The decline comes as traders adjust their positions ahead of the Federal Open Market Committee (FOMC) policy meeting scheduled for later today.

A slight rebound in the U.S. Dollar from its year-to-date low has contributed to the downward pressure on gold prices.

Despite this pullback, expectations for aggressive rate cuts by the Federal Reserve could offer support to the precious metal in the near term.

Fed Rate Cut Speculation Supports Gold

The U.S. Dollar has seen a modest rise from its yearly low, but ongoing speculation about a 50 basis point rate cut by the Fed keeps gold in focus. According to the CME Group’s FedWatch Tool, the probability of such a cut stands at over 60%.

The anticipation has driven the yield on 2-year U.S. government bonds to its lowest level since September 2022, with 10-year Treasury yields also falling to lows not seen since June 2023. Despite better-than-expected data from the Empire State Manufacturing Index, the Dollar remains weak, lending support to gold.

Geopolitical Uncertainties Bolster Safe-Haven Demand

In addition to monetary policy, geopolitical tensions and concerns about China’s economic slowdown continue to influence gold prices. Weak economic data from China over the weekend signal challenges in reaching the country’s 5% GDP growth target for 2024.

Meanwhile, political uncertainty in the U.S. and persistent geopolitical risks in the Middle East are driving investors toward gold as a safe-haven asset. These factors are expected to keep gold prices stable, even as traders await the outcome of the FOMC meeting.

Short-Term Forecast

Gold (XAU/USD) is trading near $2,576, with bearish momentum below its pivot at $2,590. A break below $2,560 could signal further declines, while resistance lies at $2,598.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading at $2,576.59, down 0.16%, just below its pivot point of $2,589.52. The price action indicates a slight bearish tone as it hovers below this critical level. Immediate support is nearby at $2,571.38, with a deeper level of support at $2,560.25.

The 50-day EMA sits comfortably at $2,542.29, providing additional support should prices continue to slide.

On the upside, immediate resistance is at $2,598.25, followed by $2,606.64 and $2,616.22, where further bullish momentum could accelerate. The bias remains bearish below $2,590, but if prices hold above $2,560, there is room for a bullish reversal. Watch for a break above $2,590 to signal a potential shift in momentum.