Gold Price Forecast: XAU/USD Declines to $2,465 Amid Fed Rate Cut Bets

Arslan Butt•Wednesday, July 17, 2024•2 min read

Despite the bearish trend in the US dollar and increasing bets on a September Fed rate cut, Gold (XAU/USD) continues to decline, edging lower to around $2,465 and hitting an intraday low of $2,462.

This downward trend is largely influenced by the risk-on sentiment in the market, which typically diminishes demand for safe-haven assets like gold. Although the drop lacks a clear reason and is expected to remain small, expectations that the Federal Reserve will keep interest rates low are helping limit losses.

Investors are now convinced that the US central bank will begin its rate-cutting cycle in September, which keeps US Treasury bond yields depressed near a multi-month low. This, in turn, weighs on the US dollar and helps to limit the losses in gold prices.

Impact of Fed Rate Cut Expectations and Consumer Resilience on Gold Prices

On the US front, the broad-based US dollar lost its traction as investors now believe the Federal Reserve will start cutting rates in September. This expectation has kept US Treasury bond yields near a multi-month low, preventing the dollar from recovering from its recent three-month low.

Federal Reserve officials, including Chair Jerome Powell and San Francisco Fed President Mary Daly, have indicated that inflation is moving towards the target, reinforcing rate cut expectations.

As a result, traders are pricing in multiple rate cuts by year-end, supporting non-yielding assets like gold, which is benefiting from this sentiment.

On the data front, the US Retail Sales data for June remained unchanged, with the previous month revised upward to show a growth of 0.3%, compared to the initially reported 0.1%. This points to consumer resilience, supporting economic growth prospects for the second quarter.

Therefore, the expectation of Fed rate cuts, reinforced by economic data showing consumer resilience, has weakened the US dollar and kept bond yields low, bolstering gold’s appeal as a safe-haven asset amidst lower interest rates.

Gold Price Forecast: Technical Outlook

Gold (XAU/USD) is currently trading at $2,466.15, experiencing a slight decline of 0.01%. The 2-hourly chart highlights several critical price levels that traders should monitor.

The pivot point is set at $2,474.65, serving as a crucial level for determining the next market move.

Immediate resistance is identified at $2,487.44, followed by $2,500.53 and $2,512.73, indicating potential targets if the price manages to break above the pivot point.

On the downside, immediate support is observed at $2,461.86, with further support levels at $2,452.33 and $2,440.14. These levels are essential for maintaining the current trend and could act as buffers against sharp declines.

Technical indicators suggest an overbought market condition, with the Relative Strength Index (RSI) at 72.51. The 50-day Exponential Moving Average (EMA) at $2,427.37 provides additional support, reinforcing the current price trend.

In conclusion, Gold remains bearish below the pivot point of $2,474.65. A break above this level could boost bullish sentiment, targeting the resistance levels mentioned.

However, maintaining below this pivot point suggests continued downside risk. Traders are advised to sell below $2,474, with an eye on immediate support levels to manage potential downturns.

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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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Gold Price Forecast: XAU/USD Declines to $2,465 Amid Fed Rate Cut Bets

Impact of Fed Rate Cut Expectations and Consumer Resilience on Gold Prices

Gold Price Forecast: Technical Outlook

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Gold Price Forecast: XAU/USD Declines to $2,465 Amid Fed Rate Cut Bets

Impact of Fed Rate Cut Expectations and Consumer Resilience on Gold Prices

Gold Price Forecast: Technical Outlook

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