Gold Price Forecast: $3,500 in Sight Amid War Fears and Fed Uncertainty

Quick overview

Gold surges towards $3,400 as geopolitical tensions rise. Military action and leader’s rhetoric pushes investors into gold. According to Tim Waterer, Chief Market Analyst at KCM Trade, “Markets are going risk-on and risk-off, and gold is stuck in the middle at $3,400.”

Recent military activity included strikes on state infrastructure and rising concerns over nuclear program. High-level evacuations and emergency meetings added to the tension. Against this backdrop gold’s traditional role as a hedge against political and economic uncertainty came into focus and global investors are back in.

Gold Traders Eye the Fed and Policy

Beyond the geopolitical headlines all eyes are on the US Federal Reserve. The two day meeting which concludes tomorrow could impact gold’s short term direction. The Fed is expected to keep rates steady but market participants are watching Chair Jerome Powell’s forward guidance. Traders are pricing in two rate cuts by the end of the year.

Lower rates weaken the dollar and decrease the opportunity cost of holding non-yielding assets like gold. If Powell hints at a dovish pivot that could accelerate gold to $3,500. But any hawkish surprise would trigger a sharp sell off.

Key Macro:

• Traders pricing in 2 rate cuts by year end
• Uncertainty over future Fed policy
• Gold’s inverse to the US dollar remains key

Gold Technical: $3,373 Support in Focus

From a technical perspective gold (XAU/USD) is trading at $3,382 just below the 50 period EMA at $3,401 which is now resistance. Momentum has weakened as the MACD has a bearish crossover and price is ranging. Failure to hold above the recent high at $3,451 reinforces the cautious tone.

Key support is at $3,373. A clean break below could see targets at $3,348 and $3,318 where a trendline converges with horizontal support. To get back bullish gold needs to reclaim $3,401 and close above $3,405.

Technical:

• Current price: $3,382
• Resistance: $3,401, $3,405
• Support: $3,373, $3,348, $3,318
• MACD: Bearish crossover

Gold Overall:

Gold is in a tight spot, with geopolitical risk and monetary policy uncertainty in play. Above $3,405 and bullish momentum may resume, below $3,373 and the correction may accelerate. For now, we wait for the Fed and the headlines.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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