Gold Price Forecast: Dollar Gains Halt Gold Surge, $2357 Pivot Key

Gold prices (XAU/USD) halted their upward trajectory on Wednesday as the U.S. Dollar gained ground following a series of hawkish remarks from Federal Reserve officials and stronger-than-expected U.S. economic indicators.
Gold Price Chart - Source: Tradingview
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This development curtailed the anticipation of a Fed rate cut in September, strengthening the Dollar and consequently pressuring the gold market. Moreover, geopolitical tensions continue to fuel demand for gold as a safe-haven asset, although this was offset by the day’s dollar strength.

Impact of U.S. Economic Indicators on Gold Prices

The near-term outlook for gold remains influenced by key U.S. economic data releases. The focus this week will be on the Fed’s Beige Book and comments from Fed’s John Williams on Wednesday.
Market participants are also eyeing the upcoming release of the U.S. Core Personal Consumption Expenditures Price Index (Core PCE) on Friday, expected to rise by 0.3% month-over-month and 2.8% year-over-year in April.
Persistent signs of inflation could delay the anticipated Fed rate cut, potentially exerting further pressure on gold prices due to increased opportunity costs associated with higher interest rates.

Global Geopolitical Developments and Central Bank Demand

Amid ongoing global tensions, the market saw Israeli Prime Minister Benjamin Netanyahu reaffirm his stance against Hamas following a deadly airstrike in Rafah, intensifying geopolitical risks. Additionally, the World Gold Council noted a decrease in physically-backed gold ETFs, with a net outflow of 11.3 metric tonnes last week, reflecting a shift in investor sentiment.

Analysts’ Outlook and Consumer Confidence

In contrast to the current market challenges, UBS analysts have revised their gold price forecasts upward, now expecting gold to reach $2,500 per ounce by September and $2,600 by the end of the year.
This optimistic forecast is supported by recent improvements in U.S. consumer confidence, which increased unexpectedly in May, suggesting a more robust economic backdrop that could influence Fed policy decisions moving forward.

Gold Technical Outlook

In today’s trading session, gold (XAU/USD) registered a slight decline, with the price at $2357.58, down by 0.18%. The market’s current dynamics are defined within a specific range of resistance and support levels around a pivot point set at $2350.32.

Gold Price Chart - Source: Tradingview

Technical Levels to Watch:
  • The initial resistance is spotted at $2336.51, which appears to be a typographical error given it sits below the current and pivot prices. More accurately, immediate upward targets should be $2379.32 followed by $2392.08.
  • On the downside, gold finds immediate support at $2324.80. Further declines could test successive support levels at $2307.40 and $2291.54.
Market Indicators:
  • The Relative Strength Index (RSI) is neutral at 49.00, indicating a balance between buying and selling pressures.
  • The 50-Day Exponential Moving Average (EMA), currently at $2363.49, sits slightly above the pivot point, suggesting a resistance level that might influence future price movements.

Conclusion:

 The current setup is bullish above the pivot point of $2350.32. A break below this level, however, could trigger a sharper decline, underscoring the importance of this pivot as a critical threshold for market sentiment.
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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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