Gold (XAU) Daily Forecast: XAU Hits $2,288 as Ascending Triangle Triggers Sell-off

By:

Arslan Ali

Published: May 1, 2024, 06:25 GMT+00:00

Key Points:

Gold prices edge up to $2,288 amid cautious trading before the Federal Reserve meeting.
Fed's expected steady rates and hawkish tone may curb gold's appeal, pressuring prices.
China's continuous gold buying since October 2022 bolsters market amidst geopolitical concerns.

In this article:

Gold

+1.83%

Market Overview

As the financial markets await the outcome of the Federal Reserve’s monetary policy meeting, gold prices recorded a slight uptick, trading around $2,288 during Wednesday’s Asian session. This marginal rise is largely attributed to investors’ cautious approach amidst significant forthcoming economic indicators.

Upcoming US Economic Data to Influence Markets

Later today, the release of the US ISM Manufacturing PMI and ADP Employment Change is expected to provide further direction to the precious metal’s price trajectory.

Meanwhile, the US Dollar Index has reached a weekly peak at 106.40, and 10-year Treasury yields have dipped to 4.67%, factors that typically influence gold’s performance.

Fed’s Monetary Policy Expectations and Impact on Gold

The Federal Reserve is anticipated to maintain its current interest rate levels, continuing its hawkish tone which might enhance the US dollar’s appeal, potentially dampening interest in non-yielding assets like gold.

Market participants are gearing up for a press conference post-Fed meeting, which is expected to shed more light on future monetary policies.

China’s Influence on Gold’s Demand

On another front, China’s consistent purchases of gold since October 2022 have supported gold prices internationally. These purchases, the longest continuous buildup since 2000, are speculated to be part of broader economic strategies, possibly relating to geopolitical maneuvers concerning Taiwan.

Gold’s immediate future appears to hinge on a confluence of Fed policy outcomes and ongoing geopolitical tensions, with any escalation potentially revitalizing gold’s status as a safe haven.

Gold – Chart

Gold Prices Forecast

Today, gold is modestly up, trading at $2,288, reflecting a slight increase of 0.08%. The metal is currently trading just below the pivotal mark set at $2,313.75, as indicated by today’s pivot point. Gold faces immediate resistance at $2,352.13, with subsequent levels at $2,378.36 and $2,417.99, which could pose significant challenges for upward movement.

On the support side, the first key level is at $2,273.69, followed by $2,243.84 and $2,212.02, which could provide critical floors should prices decline. The 50-Day and 200-Day Exponential Moving Averages are at $2,318.95 and $2,323.90, respectively, reinforcing a narrow range that Gold must navigate.

An observed breakout of the ascending triangle pattern at $2,315 suggests a bearish trading bias, signaling the potential for further declines if sustained below the pivot point of $2,313.75. A shift above this level, however, may alter market sentiment to a more bullish outlook for gold.

About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

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