Gold (XAU) Daily Forecast: XAU Rises to $2,365 as USD Hits Three-Week Low

By:

Arslan Ali

Published: Jul 5, 2024, 06:29 GMT+00:00

Gold (XAU) surges to $2,365, its highest since June 21, driven by a weaker USD amid Fed rate cut expectations.

In this article:

Gold

-0.19%

Market Overview

Gold (XAU/USD) price attracts fresh buyers, rising to $2,365, its highest level since June 21, during the Asian session on Friday. This increase follows the recent range-bound price action and is driven by the market’s pricing in a higher likelihood of the Federal Reserve cutting interest rates in September and December due to softer US macroeconomic data.

Consequently, the US Dollar (USD) has weakened for the fourth consecutive day, hitting a three-week low, which supports the commodity’s price.

Influence of Federal Reserve Speculation on XAU/USD

Despite the rise in gold prices, the prevailing risk-on environment might cap any significant rally for the safe-haven asset. Traders are likely to adopt a cautious stance ahead of the release of the US Nonfarm Payrolls (NFP) report.

This key employment data, expected to show 190K jobs added in June compared to 272K in May, will shape market expectations regarding the Fed’s policy decisions.

The unemployment rate is anticipated to remain at 4%, while Average Hourly Earnings growth may dip to a 3.9% yearly rate from 4.1% in May.

Market Reactions to US Employment Data

The expectation of an imminent start to the Federal Reserve’s rate-cutting cycle has pressured the US Dollar, aiding gold prices. However, hawkish comments from several Fed officials and the June FOMC meeting minutes indicate that policymakers are not yet convinced about lowering lending costs.

Additionally, bullish sentiment in global equity markets has restrained traders from making aggressive bullish bets on gold ahead of the US employment data.

Near-Term Outlook for Gold Prices

The upcoming Nonfarm Payrolls report will significantly influence the USD demand and provide fresh directional impetus to gold prices.

If the employment data shows signs of weakness, it could reinforce expectations of Fed rate cuts, further supporting the non-yielding gold price.

Conversely, stronger-than-expected data may bolster the USD, putting downward pressure on XAU/USD.

Short-term Forecast

Gold (XAU/USD) is expected to remain bullish above $2360.13, supported by weaker USD and potential Fed rate cuts. Immediate resistance levels are at $2366.90, $2374.45, and $2382.14, with significant support at $2354.41.

Gold Prices Forecast: Technical Analysis

Gold – Chart

Gold (XAU/USD) is trading at $2365.330, up 0.23%. On the 2-hour chart, the pivot point is $2360.13. Immediate resistance levels are $2366.90, $2374.45, and $2382.14, while support levels are $2354.41, $2346.59, and $2338.70.

Technical indicators show the 50 EMA at $2345.93 and the 200 EMA at $2334.42, indicating a bullish trend above $2360.13. However, a break below this level could trigger significant selling pressure.

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.