Gold Price Forecast: XAU/USD Nears $2172 Amid Fed Rate Cut Speculation; Sell Now?

In today’s financial analysis, we focus on GOLD for March 14, with a current price of $2172.785, reflecting a minor decline of 0.14%.  On Wednesday, the gold (XAU/USD) price forecast experienced a positive shift, with the commodity recovering the majority of its losses from the previous session, which had retreated from a near-record high last week.

Despite the U.S. inflation report showing a significant uptick, market sentiment is buoyed by expectations that the Federal Reserve may initiate interest rate cuts by June, leading to a decrease in the U.S. dollar (USD) and bolstering the appeal of gold amidst rising geopolitical tensions.

Speculation on Fed’s Rate Cut Dampens USD Strength

The USD’s potential weakness is somewhat mitigated as investors await more definitive guidance on the Fed’s approach to interest rate reductions.

This anticipation keeps U.S. Treasury yields high, restricting Gold’s capacity to capitalize on its positive momentum from the night before, resulting in subdued trading activity in the Asian markets on Thursday.

This cautious environment suggests investors should be wary of expecting a swift return to gold’s recent upward trend.

Market Eyes FOMC Meeting Amid Economic Data Release

Traders appear to be taking a cautious stance, likely opting to remain on the sidelines until the Federal Open Market Committee (FOMC) meeting, scheduled to start next Tuesday.

Before this, key U.S. economic data due to be released on Thursday—retail sales, the producer price index (PPI), and weekly jobless claims—are anticipated to impact USD pricing dynamics.

These figures, alongside U.S. bond yields and the general market sentiment, are expected to offer short-term trading opportunities for gold (XAU/USD).

Geopolitical Uncertainty Enhances Gold’s Safe-Haven Status

The continued prospect of a Fed rate cut in June has kept USD bulls on the defensive, which, in conjunction with geopolitical risks, supports gold’s appeal as a safe-haven asset.

The U.S. Consumer Price Index (CPI) report from Tuesday highlighted enduring inflation, suggesting the Fed may maintain a tight monetary stance, potentially curbing XAU/USD investors from initiating new positions.

Meanwhile, ongoing geopolitical tensions, notably the extended Russia-Ukraine conflict and the Israel-Hamas standoff, further amplify Gold’s safe-haven allure.

In the context of these geopolitical developments, the U.S. Treasury yields’ persistence at elevated levels acts as a counterbalance to any significant decline in the USD, thereby capping substantial gains for gold.

Investors are now poised for Thursday’s release of U.S. economic indicators, though the primary focus remains on the upcoming FOMC policy meeting. Amid these complex dynamics of geopolitical strife and monetary policy uncertainty, gold is positioned as a key asset, offering investors a haven amidst the tumult.

Gold Price Forecast

Gold’s pivot point stands at $2156.02, providing a baseline for our analysis. Gold faces immediate resistance at $2196.83, with subsequent barriers at $2227.22 and $2251.98. Support levels are identified at $2130.57, $2111.27, and $2090.33, crucial for maintaining the current trajectory.

Technical indicators reveal a nuanced picture. The RSI at 58 suggests a moderately bullish sentiment, while the 50-day EMA at $2145.06 confirms an upward trend, bolstering a buying perspective.

However, a bearish engulfing candle observed in the daily timeframe indicates the potential for a corrective downturn. In conclusion, the overall trend for gold leans towards bearishness below the $2180 mark.

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

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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