Gold (XAU) Daily Forecast: Will Gold Hold $2,490 as Bond Yields Rise?

Gold (XAU/USD) continued its downward trajectory on Tuesday, dipping to approximately $2,494, with an intra-day low of $2,489. The primary driver behind this decline is the strengthening U.S. Dollar (USD) and increasing U.S. Treasury bond yields, both of which are exerting pressure on the precious metal.

U.S. Economic Indicators Bolster Dollar Strength

The USD’s recent gains can be attributed to positive economic data and expectations surrounding upcoming reports. The U.S. ISM Manufacturing PMI for August is anticipated to rise slightly to 47.5 from 46.8 in July, suggesting a modest recovery in the manufacturing sector.

Additionally, the U.S. economy is expected to add 163,000 jobs in August, with the Unemployment Rate projected to rise to 4.2%. These indicators reflect underlying economic strength, further boosting the dollar.

Fed Rate Cut Speculations and Geopolitical Tensions

Despite the dollar’s upward momentum, speculation around a potential Federal Reserve interest rate cut in September continues to linger. The CME FedWatch tool shows a 69% probability of a 25-basis-point cut, with a 31% chance of a more aggressive 50-basis-point reduction.

If the Fed opts to lower rates, it could support gold prices, as lower interest rates decrease the opportunity cost of holding non-yielding assets like gold.

Furthermore, ongoing geopolitical tensions in the Middle East, while not the primary focus of market attention, still contribute to gold’s appeal as a safe-haven asset. However, these factors have limited the extent of gold’s decline rather than reversing it.

Looking Ahead: Key Data Releases

Investors are keenly awaiting the release of the ISM Manufacturing PMI report on Tuesday, followed by the crucial U.S. Nonfarm Payrolls (NFP) data for August later in the week.

These reports will play a significant role in shaping expectations around the Fed’s rate decisions and, consequently, the direction of gold prices in the near term.

Short-Term Forecast

Gold (XAU/USD) hovers near $2,494, facing pressure from a strong USD and rising bond yields. Key support at $2,489 is crucial; a break could trigger further decline.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading at $2,494.43, down 0.20% in the last 4 hours. The price is hovering just above a key support level at $2,489.96, reinforced by a double-bottom pattern, which suggests some bullish strength.

The 50-day EMA at $2,505.92 is acting as immediate resistance, followed by stronger resistance at $2,512.41 and $2,529.03. On the downside, if gold breaks below $2,489.96, we could see a sharper decline toward $2,478.75 and $2,464.29.

The broader trend remains cautiously bullish as long as prices stay above $2,489, but a break below this level could trigger a more significant sell-off. Keep an eye on that pivot point at $2,502.65—it’s crucial for short-term direction.