Gold (XAU) Price Forecast: US Jobless Claims to Drive Fed Policy, Market Sentiment

Gold Firms on US Rate-Cut Bets, Focus on Data

Gold prices firmed on Thursday as the dollar and Treasury yields retreated on rising bets that the U.S. Federal Reserve may begin an interest rate cut cycle in September. Spot gold increased, positioning itself to end a five-session losing streak, while U.S. gold futures also climbed. Investors are cautiously monitoring the 50-day moving average at $2368.80, which has been a key support level since March. A breach below this level could lead to a significant price drop of $50 or more.

At 11:19 GMT, XAU/USD is trading $2411.32, up $28.41 or 1.19%.

Dollar and Treasury Yields Retreat

The dollar index fell by 0.1%, making gold more affordable for international buyers. Concurrently, the 10-year U.S. Treasury yield slipped, easing the cost of holding non-yielding bullion. Gold prices had previously dropped by 3% on Monday due to a global sell-off triggered by U.S. recession fears. Despite this, the shallow correction in gold prices has bolstered investor confidence, leading to renewed long positions.

Rate-Cut Expectations and Jobless Claims

Major brokerages, including J.P. Morgan, Citigroup, and Wells Fargo, have forecast a 50-basis-point interest rate cut by the Federal Reserve in September following last week’s U.S. jobs data. Market participants are now awaiting the weekly U.S. jobless claims data, which could further influence gold prices. The data is anticipated to show a decrease in initial jobless claims to 240,000 from the previous week’s 249,000, signaling potential economic stability.

Impact of Geopolitical and Economic Uncertainties

Gold, often considered a safe-haven asset, thrives during geopolitical and economic uncertainties. Recent events, such as the killing of senior members of Hamas and Hezbollah, have raised concerns about potential retaliatory actions, adding to gold’s appeal. Additionally, ongoing concerns over U.S. economic data and debt issues are likely to provide further support for gold prices.

Market Forecast: Bullish Outlook

In the short term, gold is expected to trade higher, driven by the anticipation of rate cuts and ongoing economic uncertainties. If the Federal Reserve signals a dovish shift in its upcoming meetings, gold prices could post new record highs. However, a substantial drop in prices may be necessary to attract fresh investments into the market. Overall, the current environment suggests a bullish outlook for gold as traders position themselves ahead of key economic data releases and Fed decisions.

Technical Analysis

XAU/USD is edging higher on Thursday. The intermediate-term support is being provided by the 50-day moving average at $2368.97. The short-term support is a pivot at $2380.54.

The critical support is the 50-day MA. If it fails to hold, prices could eventually collapse to $2293.69 to $2277.34.

Despite establishing support at $2380.54 to $2368.97, XAU/USD is still facing resistance. One key level to overcome is the pivot a $2418.47. Overtaking this level will open the door to a test of the double-top at $2477.73 and $2483.74.