On March 29, Gold (XAU/USD) advanced to $2233.12, marking a 1.74% increase, as investors gravitated towards safe havens due to mounting economic worries and anticipated U.S. Federal Reserve rate cuts.

Fed Rate Cut Anticipations Propel Gold

The gold (XAU/USD) price has been buoyed by expectations of up to three rate cuts by the Fed this year. Currently, the Fed’s rate stands at 5.25%-5.50%, unchanged for the fifth consecutive session.

Market odds, via the CME FedWatch Tool, show a 63% chance of a rate cut in June. Historically, lower interest rates devalue the USD, making gold more affordable for investors using other currencies, thus lifting its price.

Middle East Tensions Boost Gold’s Safe-Haven Status

Geopolitical instability, notably in the Middle East, has amplified gold’s safe-haven allure. For instance, recent conflicts in Gaza, where Israeli forces clashed with local entities, underscore the region’s volatility and the consequent investor shift towards gold.

Economic Indicators and Fed’s Hawkish Tone May Restrain Gold

On the flip side, the Gold (XAU/USD) price forecast could be tempered by hawkish remarks from Fed officials and strong U.S. economic data. Fed Governor Christopher Waller and Atlanta Fed President Raphael Bostic have signaled a cautious approach to rate cuts, with Bostic revising his outlook to one quarter-point cut this year, down from two.

With the upcoming U.S. February Personal Consumption Expenditures (PCE) Price Index release, particularly the Core PCE (Fed’s preferred inflation measure), projected to increase by 0.3%, the market’s response could significantly impact gold prices.

This data, especially relevant during the market quiet of Good Friday, will be a critical factor for the gold (XAU/USD) price trajectory, offering a numerical gauge of inflationary pressures.

Gold Price Forecast: Technical Outlook