Gold Price Forecast: Weakness Ahead as Prices Slip Below $2,650 Amid Fed Speculation

Gold prices remained flat on Tuesday as investors awaited clarity on potential U.S. interest rate cuts by the Federal Reserve.

GOLD

Spot gold was trading at $2,646.64 per ounce, holding steady since the previous session. Last month, gold hit a record high of $2,685.42, but the recent market focus has shifted to the Fed’s monetary policy and its implications for bullion prices.

The upcoming U.S. elections and uncertainty around economic policies are expected to fuel gold demand, especially as investors seek safe-haven assets. Analysts predict that gold prices could rise to $2,800 by year-end if the Fed opts for incremental rate cuts of 25 basis points. With the dollar climbing to a two-month peak and Treasury yields inching higher, gold remains under pressure for now.

Fed Rate Cuts: Impact on Gold Prices

Comments from Federal Reserve officials have sparked speculation regarding future rate cuts. Fed Governor Christopher Waller emphasized caution, while Minneapolis Fed President Neel Kashkari indicated further reductions might be on the horizon as the central bank works toward its 2% inflation target. The CME FedWatch tool shows an 87% probability of a 25-basis-point cut in November, which could improve the appeal of holding non-yielding assets like gold.

Lower interest rates generally boost the attractiveness of gold, and with rate cuts on the table, gold could regain its bullish momentum in the near future. Central banks have also remained strong buyers of gold, further contributing to its long-term value as a reserve asset.

Gold Price Technical Outlook

Gold prices are currently showing signs of weakness after completing a 38.2% Fibonacci retracement, now trading around $2,642. Immediate resistance is seen at $2,651, with further resistance levels at $2,659 and $2,665. Failure to surpass these levels could lead to a deeper correction. On the downside, immediate support lies at $2,635, followed by $2,628 and $2,617, which align with the 61.8% Fibonacci retracement.

GOLD Price Chart - Source: Tradingview

The 50-day EMA at $2,642.52 is providing a key pivot point, but gold has yet to reclaim this level convincingly. The Relative Strength Index (RSI) is currently at 45.70, signaling mild bearish momentum, which could lead to additional selling pressure in the short term.

Key Insights:

  • Immediate Resistance: $2,651

  • Support Levels: $2,635, $2,628

  • RSI: 45.70, signaling bearish sentiment

Conclusion:
Gold is under pressure, with the potential for further downside after completing its Fibonacci retracement. If the support at $2,635 does not hold, the market could see a deeper correction as investors await more clarity from the Federal Reserve on interest rate policies.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
ABOUT THE AUTHOR See More
Avatar
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.
Related Articles
Comments
0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments