Gold (XAU) Daily Forecast: Will Fed Signals and Geopolitical Risks Drive Prices Above $2,516?

Market Overview

Gold prices (XAU/USD) continue their downward trend, with the precious metal hovering around $2,509. The drop, which saw an intra-day low of $2,505.93, can be linked to a modest recovery in the US Dollar (USD) on Tuesday.

However, potential shifts in US monetary policy and ongoing geopolitical tensions could soon change the trajectory.

Fed Signals: Could Interest Rate Cuts Support Gold?

One of the key factors currently influencing gold prices is the potential for interest rate cuts by the US Federal Reserve. Fed Chair Jerome Powell hinted at Jackson Hole that rate cuts might be on the horizon, which could be positive for gold.

Lower interest rates typically benefit gold, as they reduce the opportunity cost of holding non-yielding assets like gold. Additionally, other Fed officials, including San Francisco Fed President Mary Daly, have indicated that rate cuts could be appropriate soon.

Geopolitical Uncertainty: A Boost for Gold?

Rising geopolitical tensions, particularly in the Middle East, are also keeping gold in the spotlight as a safe-haven asset. The recent military skirmishes between Israel and Hezbollah, along with ongoing concerns about Iran, have added a layer of uncertainty to the global landscape.

Although fears of a wider conflict have somewhat eased, the situation remains fluid, and any escalation could drive gold prices higher as investors seek safe assets.

China’s Economic Slowdown and Its Impact on Gold

Meanwhile, China’s sluggish economy is another factor exerting downward pressure on gold prices. The People’s Bank of China (PBOC) has halted gold purchases for the third consecutive month, which has weakened overall market support for the metal.

As the world’s largest producer and consumer of gold, China’s economic health plays a significant role in shaping gold market trends. Traders are watching closely for any new data that could signal changes in China’s demand for precious metals.

Looking Ahead: What’s Next for Gold?

Traders and analysts will be closely monitoring upcoming US economic indicators, including the Consumer Confidence report and Housing Price Index, for further clues on the direction of gold prices.

Additionally, preliminary US GDP data and the PCE Price Index later this week will be critical in assessing the potential for further monetary policy adjustments.

Short-Term Forecast

Gold remains under pressure below $2,516, with immediate support at $2,500. A move above $2,516 could trigger a bullish trend, but risks remain due to broader market uncertainties.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is currently priced at $2,509.32, down 0.35%. The key level to watch is the pivot point at $2,516.55. If prices stay below this, the outlook is bearish, with immediate support at $2,500.15, followed by $2,486.23 and $2,470.51.

On the upside, breaking above $2,516.55 could lead to a bullish trend, with resistance at $2,529.03, $2,541.48, and $2,555.85. The 50-day EMA at $2,495.79 and the upward trendline are offering some support for a potential bullish move, but the 200-day EMA at $2,442.47 suggests underlying caution.

In summary, gold remains bearish below $2,516, but if it climbs above $2,500, it may shift toward a more bullish stance.