Gold (XAU) Forecast: Will Upcoming U.S. Data Drive Prices Higher?

Gold Prices Edge Higher as Traders Await Key U.S. Economic Data

Gold prices increased slightly on Wednesday as investors anticipate important U.S. economic releases that could impact the Federal Reserve’s interest rate decisions. The precious metal’s gains were supported by a minor decrease in Treasury yields.

At 10:40 GMT, XAU/USD is trading $2412.39, up $2.74 or +0.11%.

Upcoming Economic Indicators

Several crucial economic indicators are scheduled for release this week. July’s flash manufacturing and services PMI data are due on July 26, followed by second-quarter GDP figures on July 27. June’s personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, will be released on July 28. These reports are expected to provide insights into the U.S. economic outlook and potentially influence the central bank’s monetary policy decisions.

Market Expectations and Expert Analysis

Tim Waterer, chief market analyst at KCM Trade, suggests that strong GDP or core PCE figures could temporarily hinder gold’s progress due to potential dollar strength. However, he maintains a positive near-term outlook for gold, given expectations of upcoming Fed rate cuts. A recent Reuters poll indicates that most economists anticipate two Fed rate cuts this year, in September and December, despite resilient U.S. consumer demand.

Gold Price Movements and Forecasts

Gold reached an all-time high of $2,483.60 last week, driven by increasing rate cut expectations. Lower interest rates typically boost gold’s appeal by reducing the opportunity cost of holding the non-yielding asset. A Reuters poll of 39 analysts and traders forecasts gold prices to average $2,300 per troy ounce in 2024, with projections of $2,387.50 for Q3 and $2,445 for Q4. This represents a significant increase from the $2,190 average predicted three months ago.

Market Forecast

The outlook for gold remains bullish in the short term. Factors supporting this positive trend include geopolitical tensions, anticipated monetary easing, and uncertainty surrounding U.S. elections. However, potential challenges exist in price-sensitive sectors such as retail investor and jewelry demand, which may soften at higher price levels.

Technical Analysis

XAU/USD is trading higher for a second session on Wednesday as investors attempt to claw back last week’s steep losses.

The intermediate-range is $2286.83 to $2483.74. On Monday, the market fell to its 50% level at $2385.28, attracting buyers and putting in the low of the week so far.

The short-term range is $2483.74 to $2383.93. If the upside momentum continues then look for a test of its 50% level at $2433.84. This price level is crucial and is likely to determine the near-term direction of the market.