Gold (XAU) Daily Forecast: Will Softer Inflation and Dollar Weakness Push Gold to $2,600?

Market Overview

old (XAU/USD) surged to a new all-time high of $2,570 during Friday’s Asian trading session, continuing its strong upward momentum. This rally comes on the heels of a weaker-than-expected U.S. Producer Price Index (PPI) report, signaling easing inflationary pressures.

The data has sparked speculation that the Federal Reserve may opt for a significant interest rate cut in its upcoming September meeting.

Easing Inflation Drives Gold Rally

Thursday’s PPI report revealed that inflation is cooling more than anticipated, with the annual headline PPI rising by 1.7%, slightly below the expected 1.8%. Core PPI, excluding volatile items like food and energy, increased by 2.4%, also missing forecasts.

These softer inflation numbers have lowered expectations of aggressive monetary tightening, pushing U.S. Treasury yields near 2024 lows and weakening the U.S. Dollar.

“Gold has become more attractive as real yields fall, and the dollar softens,” noted a market strategist from JPMorgan. The weakening dollar and falling bond yields have boosted non-yielding assets like gold, driving prices to record levels.

Geopolitical Tensions Provide Additional Support

Gold’s rise is also fueled by geopolitical instability. Ongoing tensions in the Middle East, along with the prolonged conflict between Russia and Ukraine, have heightened demand for gold as a safe-haven investment.

While markets remain focused on next week’s Federal Reserve decision, these global uncertainties continue to push investors toward gold.

Short-Term Forecast

Gold is likely to remain bullish as it trades above $2,570, with immediate resistance at $2,575.54. A break higher could signal further gains, driven by easing inflation and geopolitical uncertainty.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is trading at $2,570, up 0.39% in the 4-hour timeframe. Currently, the price sits above the pivot point at $2,565.80, indicating short-term bullish momentum. Immediate resistance is at $2,575.54, with higher resistance levels at $2,586.19 and $2,598.18.

If gold breaks these levels, further upside is likely. However, on the downside, immediate support rests at $2,557.88, followed by $2,547.12. The 50-day EMA of $2,516.17 provides solid medium-term support, while the 200-day EMA at $2,479.44 reflects longer-term strength.

A bullish trend is reinforced by the appearance of three bullish engulfing candles, suggesting buyers are still in control of the market.