Gold (XAU) Daily Forecast: Watch $2,500 Support as Fed Signals Rate Cuts

Gold prices (XAU/USD) are currently trading around $2,506.31, experiencing downward pressure due to a modest recovery in the US Dollar.

Despite Federal Reserve Chair Jerome Powell’s recent hints at potential interest rate cuts during his Jackson Hole speech, the stronger dollar continues to weigh on gold. The US Consumer Confidence Index rose to 103.3 in August, its highest level in six months, further supporting the dollar.

$Gold price has returned to red but remains within this week’s familiar range above $2,500 early Wednesday. Gold price replicates negative action seen during Tuesday’s Asian session, awaiting speeches from US FED policymakers for fresh hints on interest-rate outlook.#XAUUSD pic.twitter.com/dkPW3wK7WY

— Natasha Johnson (@NatashaJohnfx) August 28, 2024

Key economic data later this week, including the US Q2 GDP and the PCE Price Index, could impact the USD and, in turn, gold prices. Any stronger-than-expected data may bolster the dollar further, capping potential gains in gold.

Geopolitical Tensions Influence Gold Market Dynamics

Geopolitical tensions in the Middle East are also playing a significant role in the gold market. The mobilization of thousands of troops in the West Bank and ongoing conflicts in Gaza have created a backdrop of uncertainty. This geopolitical unrest often drives investors toward safe-haven assets like gold.

Bloomberg reported a 15-tonne increase in Gold ETF holdings last week, reflecting heightened speculative interest. However, despite this interest, the stronger dollar and profit-taking activities have kept gold prices subdued.

Gold rise above $2,500 due to Middle East geopolitical tensions and potential Fed rate cuts.

Dovish signals from Fed Chair Jerome Powell support gold's rally

Investors await Fed speeches and economic data for clues on US rates and gold prices#DXY #FED #GOLD #INFALTION #Xauusd pic.twitter.com/ErxlavZrvv

— eva kk (@Forexevabk) August 28, 2024

Gold Technical Analysis: Key Levels to Watch

• Current Price: $2,506.31
• Immediate Resistance: $2,528
• Immediate Support: $2,499

Gold remains within an ascending channel on the 4-hour chart, with immediate support at the 50-period EMA around $2,499. A break below this could see gold testing the next support at $2,476.

The RSI has dipped below 50, suggesting weakening momentum. Traders should monitor these levels closely, as a break below the EMA could signal a bearish trend, while a rebound may suggest a continuation of the uptrend towards the $2,551 resistance.