Gold (XAU) Price Forecast: Will Acceleration to Upside Follow Move to New Record High?

Gold Reaches New Record High Before Pullback

Gold prices inched to an all-time high of $2,688.84 early Thursday before retreating, with the market showing signs of consolidation. This brief rally fell short of the breakout anticipated by some bulls, as traders closely monitor whether the market can sustain these elevated levels.

Any turn lower in price action could signal profit-taking, and if gold breaks below $2,604.39, the overall trend may shift downward. Despite this, strong support remains at the 50-day moving average of $2,566.83, which could prevent a deeper decline.

US Rate Cuts and Election Concerns Drive Demand for Gold

Gold’s latest climb is largely driven by expectations of further rate cuts from the U.S. Federal Reserve and heightened uncertainty around the upcoming U.S. presidential election. With less than three weeks before the vote, the close race between Donald Trump and Kamala Harris has added another layer of caution in the market, pushing investors toward safe-haven assets like gold.

So far, gold has posted a remarkable 30% gain in 2024, fueled by ongoing geopolitical risks and the Fed’s aggressive monetary easing, which included a substantial rate cut last month. Traders are also watching the European Central Bank (ECB), which is expected to announce its first back-to-back rate cut in 13 years, further supporting demand for non-yielding assets like gold.

Market Projections Suggest Gold Could Surpass $3,000

The longer-term outlook for gold remains positive, with the London Bullion Market Association (LBMA) poll indicating expectations that gold could rally to $2,941 per ounce within 12 months, with potential to approach $3,000. This optimism is shared by analysts like Ole Hansen from Saxo Bank, who sees the current environment as supportive for further gains in both gold and silver.

Traders Await Key Economic Data

Thursday’s market action will likely be influenced by U.S. retail sales and industrial production data for September, as well as weekly jobless claims reports. A weak set of data could reinforce the case for further Fed rate cuts, providing additional support for gold prices. Investors are also weighing recent comments from Fed officials regarding the potential path of interest rates, with more updates expected later this week.

Treasury Yields and Strong Dollar Weigh on Gold

However, rising U.S. Treasury yields, coupled with a stronger U.S. dollar, are exerting pressure on gold. The U.S. Dollar Index hit its highest level since August 2, nearing its 200-day moving average of 103.772. A stronger dollar typically weighs on demand for dollar-denominated assets like gold, posing a potential headwind for further price gains.

Gold Prices Forecast

In the short term, gold is likely to remain in a consolidation phase, with traders watching the $2,604.39 support level closely. A break below this could trigger further selling, but if the price holds, we may see another attempt at new highs. The longer-term outlook remains bullish, particularly if economic data disappoints and central banks continue their dovish stance, supporting further gains toward $3,000 per ounce.