Gold (XAU) Forecast: Prices Dip to $2,335 Amid Strong USD and Rising Yields

Gold (XAU/USD) traded lower on Thursday, pressured by a stronger US Dollar (USD) and rising US yields. The reduced likelihood of a Federal Reserve (Fed) rate cut in September increases gold’s opportunity costs, contributing to the selling pressure.

Gold Price Chart - Source: Tradingview

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US Economic Data Impact on XAU/USD Price

Investors are closely watching the second estimate of the US Gross Domestic Product (GDP) for Q1 2024, set to be released on Thursday. A stronger-than-expected GDP reading could further boost the USD, negatively impacting the USD-denominated gold price.

The preliminary GDP growth is estimated at 1.3% annually, while the GDP Price Index is expected to remain at 3.1%. Additionally, unemployment claims are projected to rise slightly to 218K.

Geopolitical Tensions and Safe-Haven Demand

Ongoing geopolitical tensions in the Middle East are likely to support safe-haven assets like gold. The Israeli military announced operational control over the Philadelphi Corridor, a 14-kilometre strip along the Gaza-Egypt border.

This development, reported by CNN, may increase market uncertainty, thereby boosting demand for gold.

Central Bank Demand and Market Sentiment

Despite recent outflows from physically-backed gold ETFs, with a net outflow of 11.3 metric tonnes last week, rising central bank demand may limit the downside for gold.

Additionally, Fed Atlanta President Bostic noted on Thursday that the breadth of price gains remains significant, but a reduction in inflation breadth could increase confidence for a rate cut.

Market sentiment is also influenced by the Fed’s Beige Book, which highlighted modest price increases and expanding economic activity from early April to mid-May.

In conclusion, while the firmer USD and higher yields exert downward pressure on gold prices, ongoing geopolitical tensions and central bank demand may offer some support.

The market’s focus remains on key economic data releases and the Fed’s policy stance, which will likely drive XAU/USD price movements in the near term.

Gold (XAU/USD) Price Forecast: Technical Outlook

Gold is trading at $2,335.13, down 0.14%, with the pivot point at $2,340.63. The pivot point is crucial for determining the next market direction. Immediate resistance levels are at $2,350.20, $2,366.51, and $2,379.32.

On the downside, immediate support is found at $2,324.80, with further support at $2,307.40 and $2,291.54.Technical indicators show the 50-day Exponential Moving Average (EMA) at $2,358.31, suggesting potential resistance.

The Relative Strength Index (RSI) is at 36, indicating a bearish sentiment in the market. In conclusion, the outlook remains bullish above the $2,325 support level. However, a break below this level could trigger a sharp selling trend, emphasizing the importance of monitoring these key levels.

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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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