Gold (XAU) Price Forecast: Will Fed Minutes Trigger a Breakout Above $2,550?

Gold Prices Ease as Market Awaits Key Fed Signals

Gold prices softened on Wednesday, retreating slightly after reaching an all-time high of $2,531.77 in the previous session. This decline comes as bullish traders take a breather, with the market showing signs of consolidation. The current inside trading range suggests investor indecision, with many waiting for critical updates from the U.S. Federal Reserve before making further moves. The potential for increased volatility or a shift in momentum is on the horizon as traders weigh the likelihood of profit-taking or a change from the current bullish sentiment.

At 12:03 GMT, XAU/USD is trading $2387.02, up $22.72 or +0.96%.

Anticipation Builds Ahead of Fed Minutes and Jackson Hole Speech

The market’s focus is now squarely on the upcoming release of the Federal Reserve’s meeting minutes and the much-anticipated speech by Fed Chair Jerome Powell at the Jackson Hole symposium on Friday. These events are expected to provide crucial insights into the central bank’s monetary policy direction.

Despite the dollar’s slide to its lowest level this year and declining U.S. Treasury yields, gold prices have struggled to sustain their record highs. Traders have largely factored in a 25-basis-point rate cut at the Fed’s September meeting, with a 70% probability, as reflected in the CME FedWatch tool.

Powell’s speech is anticipated to be a potential trigger for the Fed’s next rate-cutting cycle, which could extend into 2025, potentially driving gold prices toward $3,000 according to some analysts, including Ricardo Evangelista of ActivTrades.

Geopolitical Developments and Market Sentiment

Gold’s impressive performance in 2024, with prices up nearly 22%, has been driven by several factors, including geopolitical tensions, uncertainty surrounding the U.S. presidential elections, and expectations of lower interest rates.

However, developments in the Middle East, particularly the possibility of a ceasefire between Israel and Hamas, could undermine the “war premium” that has been supporting gold prices. U.S. Secretary of State Antony Blinken’s recent efforts to broker peace in Gaza have raised the potential for a de-escalation in conflict, which could prompt traders to book profits, thereby applying downward pressure on gold.

Market Forecast: Cautious Bullish Outlook

In the near term, gold prices appear vulnerable to a pullback as traders await clarity from the Fed. While prices could spike to $2,550 per ounce, the potential for profit-taking and geopolitical shifts may lead to a temporary decline.

Despite these risks, the overall outlook remains bullish, especially if the Fed signals an extended rate-cutting cycle. Traders should remain alert to the possibility of short-term reversals, but the broader trend suggests continued support for higher gold prices in the months ahead.

Technical Analysis

XAU/USD is struggling on Wednesday to regain the momentum of the past few days that drove prices to a record high yesterday.

While a trade through $2531.77 will signal a resumption of the uptrend, a move through $2497.40 will produce a fresh minor top. If there is a shift in momentum to the downside, sellers will be eyeing stops under the recent main bottom at $2432.22. A trade through this level will change the main trend to down and put the 50-day moving average at $2395.87 on the radar.