Gold (XAU/USD) Rises to $2,430 on Fed Easing Hopes and Middle East Tensions

Gold price (XAU/USD) maintained its upward rally and remained bullish around the 2,431.14 level, hitting an intra-day high of 2,437.

The upticks were supported by expectations of Fed easing in September. Market participants remain convinced the Federal Reserve (Fed) could begin to ease policy at the upcoming September meeting. This undermined the US dollar and contributed to the gold price gains.

Apart from this, heightened tensions between Israel, Lebanon, and Iran have further supported gold prices. Traders are also preparing for a busy US economic calendar next week, with key data on inflation, retail sales, building permits, and consumer sentiment expected to draw significant attention.

Gold Prices Supported by Fed Rate Cut Expectations Amid Mixed Economic Signals

On the US front, the broad-based US dollar has been falling as markets fully anticipate a 25-basis point rate cut by the Federal Reserve in September, with some even speculating a 50-basis point cut.

Gold closed the week at $2430.87, down -.46%.

It’s holding above the $2,430 support on the daily and weekly charts. If that fails, the next support is $2,400, then $2,230 (the 200-SMA)

The next resistance is $2,450, then the all-time high of 2,489.74.

The risk/reward between… pic.twitter.com/VNn3SCwH1B

— Ageless Investing (@AgelessInvesti1) August 10, 2024

This expectation has provided support for gold prices. However, a robust labor market report released on Thursday has alleviated recession fears and increased investor confidence, thereby diminishing gold’s appeal as a safe-haven asset.

Despite recent economic data indicating a slowdown in the US economy, the decline has not been severe enough to rekindle recession worries, as evidenced by gains in US equities during the late New York session. Additionally, lower-than-expected Initial Jobless Claims for the week ending August 3 suggest that the job market remains resilient.

On the data front, July’s Producer Price Index is expected to drop from 0.2% to 0.1% month-over-month. The Consumer Price Index (CPI) is predicted to tick down from 3% to 2.9% year-over-year, with core CPI also expected to fall from 3.3% to 3.2%. Retail Sales in the US are anticipated to rise from 0% to 0.3% month-over-month.

Hence, the expectations of Fed rate cuts and easing recession fears may initially support gold prices, but rising investor confidence and stronger economic data could dampen gold’s appeal as a safe-haven asset.

Geopolitical Tensions in the Middle East Bolster Gold Prices

Another factor boosting the gold price is ongoing tensions in the Middle East. Reports indicate that the situation could escalate, with Israeli defense officials coordinating with the Pentagon to prepare for possible responses to Iran and Hezbollah.

This uncertainty has increased demand for gold as a safe-haven asset, keeping XAU/USD strong. Investors often turn to gold during geopolitical instability, and the potential for further conflict in the region is adding to the metal’s appeal.

XAUUSD: Hello traders,
Wave 2 has probably ended at 2364.42 zone.
Wave 3 is aimed at getting to 2517.00 zone.
Afterwards, wave 4 is targeted at reaching
2483.76-2469.00 zone. Then wave 5 is aimed
at getting to 2570.00-2585.00 zone.
Thanks. pic.twitter.com/llZPXXFm9c

— MASTERWORK10: MANAGED FOREX ACCOUNTS-PAID SIGNALS. (@fxmasterpiece10) August 11, 2024

Gold Technical Outlook – Price Forecast

Gold is currently trading at $2,431.26 on the 4-hour chart, with a key pivot point identified at $2,427.64. The immediate resistance is at $2,441.94, followed by higher resistances at $2,459.04 and $2,478.45. On the downside, immediate support is at $2,413.32, with further support levels at $2,407.06 and $2,380.55.

Technical indicators present mixed signals. The RSI is at 58.81, indicating moderate bullish momentum. The 50-day Exponential Moving Average (EMA) is at $2,413.32, with the price trading above it, suggesting a continuation of the bullish trend.