Gold (XAU) Price Forecast: Sustained Move Over $2693 Could Lead to All-Time Highs

Gold Prices Surge Testing Key Resistance Levels

Gold prices climbed sharply on Friday, testing the upper boundary of the short-term retracement zone at $2663.51 to $2693.40. The metal is also trading above the 50-day moving average at $2663.78, forming a critical support cluster alongside the 50% retracement level. These technical markers suggest pivotal levels for traders eyeing the next breakout.

While the short-term trend remains bearish, a sustained move above $2693.40 could signal intensified counter-trend buying, potentially targeting the all-time high of $2790.17. Conversely, failure to hold $2663.51 as support may weaken sentiment, with the price possibly retreating to lower levels.

At 12:22 GMT, XAU/USD is trading $2699.47, up $29.82 or +1.12%.

Safe-Haven Demand Fuels Gold Rally

Gold is on track for its best week in over a year, surging 5% amid escalating geopolitical tensions between Russia and Ukraine. Spot gold reached its highest since early November, while U.S. gold futures followed suit. This rally persists despite the U.S. dollar reaching a 13-month high, underscoring robust safe-haven demand.

Geopolitical uncertainty has been a major catalyst, with Ukraine reporting strikes on key Russian infrastructure. Analysts, including UBS’s Giovanni Staunovo, note that both gold and the dollar have drawn safe-haven flows, an unusual simultaneous rally. Bitcoin’s approach to the $100,000 mark further highlights investors’ hedging against global risks.

Interest Rate Expectations Impact Sentiment

Expectations of Federal Reserve policy shifts continue to shape market outlooks. The CME FedWatch tool indicates a 59.4% probability of a 25-basis-point rate cut at the December meeting. However, strategists like Soni Kumari of ANZ warn that if the Fed skips or delays this cut, gold prices may face near-term pullbacks. Recent dovish comments from Chicago Fed President Austan Goolsbee signal more rate cuts ahead, lending support to gold’s bullish outlook.

Economic Data and Dollar Strength

Mixed U.S. economic data has further influenced market dynamics. While initial jobless claims fell to 213,000, suggesting labor market resilience, weak manufacturing data highlighted broader economic vulnerabilities. Treasury yields declined, and the U.S. Dollar Index (DXY) soared to a 13-month peak, supported by concerns over inflationary pressures tied to fiscal policies. This dollar strength has tempered some of gold’s upside momentum.

Market Forecast

Gold’s technical and fundamental backdrop suggests a cautiously bullish outlook. A sustained break above $2693.40 would confirm upward momentum, paving the way toward $2790.17. However, resistance at current levels and potential Fed policy surprises could cap gains in the near term. Traders should monitor key support at $2663.51 and geopolitical developments for directional cues.