Gold (XAU) Daily Forecast: Will Weak USD Drive Prices Beyond $2,500 Resistance?

Market Overview

Gold prices (XAU/USD) managed to reverse their downward trend, recovering from overnight losses and rising to approximately $2,493.35, with an intraday high of $2,495.81.

This rebound is largely attributed to a weakening US dollar, as expectations of a dovish Federal Reserve (Fed) prompt some USD selling. Persistent geopolitical tensions are also providing additional support for gold.

Weakening US Dollar and Fed Rate Cut Expectations

The broad-based US Dollar (USD) has been losing momentum due to increasing speculation that the Federal Reserve may begin lowering borrowing costs in its September policy meeting.

Although the USD had shown a slight rebound driven by a rise in US Treasury bond yields, this recovery has been weak, as investors anticipate an imminent rate-cutting cycle by the Fed, helping to limit losses for XAU/USD.

Additionally, mixed US economic data, including higher-than-expected initial jobless claims and a sharp contraction in the manufacturing sector, have added to market uncertainty, further bolstering gold’s appeal as a safe-haven asset.

Geopolitical Tensions Bolster Gold as a Safe-Haven Asset

Ongoing geopolitical tensions are reinforcing gold’s status as a safe-haven asset. The persistent global uncertainties are driving investors toward gold, seeking protection from risk and volatility in other markets.

As these tensions continue to simmer, gold prices are finding strong support, further reinforcing its upward momentum.

Overall, the weakening US dollar, combined with dovish Fed expectations and ongoing geopolitical tensions, has contributed to the resilience of gold prices, keeping them well-supported in the current market environment.

Short-Term Forecast

Gold prices are likely to stay volatile around $2,493, with $2,500 acting as a critical resistance level. Watch for potential bullish momentum if gold breaks above this key mark.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) currently holds near $2493.35, with the upward trendline providing strong support around $2480. Immediate resistance is found near the $2500 mark, a key psychological level that also acts as a pivot point.

The 50-day Exponential Moving Average (EMA) at $2496.58 suggests that the market is slightly bullish but faces potential resistance just above current levels. A break above $2500 could trigger further bullish momentum, with the next resistance levels at $2514.19 and $2529.03.

Conversely, failure to maintain above $2500 could see gold retracing towards $2470.54 or lower. Bearish below $2500, with potential for a bullish breakout if prices manage to sustain above this key level.