Gold (XAU) Daily Forecast: Will Fed Decisions Push Prices Beyond $2,585 Resistance?

Market Overview

Gold prices continue to show positive momentum, trading around $2,575 but still below the near-record highs of $2,589-$2,590. The recent uptick in gold can be attributed to market speculation over an expected Federal Reserve interest rate cut, which has pressured the US dollar.

Market participants currently see a 65% chance of a 50 basis point cut in the upcoming Federal Open Market Committee (FOMC) meeting, weakening the dollar and increasing demand for non-yielding assets like gold.

Economic Data Adds to Gold’s Appeal

The US economy showed mixed signals, with retail sales in August rising 0.1%, marginally better than the expected 0.2% decline. While this initially caused a brief dollar rally, the momentum faded as dovish expectations surrounding the Federal Reserve persisted.

In the bond market, the 10-year US Treasury yield rebounded from a 16-month low, which limited the dollar’s recovery but kept gold prices steady.

Looking ahead, traders are keenly awaiting the Fed’s ‘dot plot’ and economic projections for clearer guidance. These could provide fresh insights into the Fed’s stance on future rate hikes or cuts, which will likely be pivotal for both gold prices and the US dollar.

Geopolitical Tensions Drive Safe-Haven Demand

In addition to the economic factors, geopolitical tensions continue to bolster demand for gold as a safe-haven asset. Recent events in the Middle East and rising global uncertainty have contributed to the metal’s appeal, as investors seek protection from potential market instability.

As the markets await the outcome of the upcoming FOMC meeting, both rate cut expectations and global tensions are likely to keep gold trading near elevated levels in the near term.

Short-Term Forecast

Gold prices hover around $2,575, supported by Fed rate cut expectations. Key resistance remains at $2,585; a break above this level could reignite bullish momentum.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading at $2,567.82, up 0.03%, hovering just below key levels of resistance and retracement zones. The price has already completed a 23.6% Fibonacci retracement at $2,571.38 and a 38.2% retracement at $2,563.25. These levels are now acting as critical support.

A break below the 38.2% level could send prices towards the next support zones at the 50% and 61.8% Fibonacci retracement levels, located around $2,550 and $2,542, respectively.

However, if Gold holds above the $2,560 level, buyers may step back in, driving prices toward the pivot point at $2,589.53. The 50-day EMA at $2,548.31 is offering additional support, while the 200-day EMA at $2,496.35 remains distant but important in the longer-term outlook.

Gold remains bearish below $2,585, but a break above this level could renew bullish momentum.