Gold Price Forecast: $4,460 Holds as Fed Cut Bets and Geopolitics Fuel Demand
Gold prices surged to a one-week high of around $4460 in early European trading on Tuesday, continuing a rebound that reflects growing...
Quick overview
- Gold prices reached a one-week high of approximately $4460, driven by increasing investor fears amid geopolitical uncertainty.
- The ongoing tensions in regions like the Middle East and Eastern Europe are prompting investors to seek safety in gold rather than speculate on its price.
- Mixed signals from the US economy suggest the Federal Reserve may adopt a more cautious approach to interest rates, further supporting gold's appeal.
- Technically, gold remains above key support levels, indicating a constructive outlook with potential for further gains.
Gold prices surged to a one-week high of around $4460 in early European trading on Tuesday, continuing a rebound that reflects growing investor fears. Geopolitical uncertainty is getting worse, and most people think the US Federal Reserve will be more cautious, which has led to a significant boost in demand for things people usually turn to when they’re nervous, like gold.
There’s a lot of tension all over the world right now – from the Middle East to Eastern Europe – and that’s kept a lid on people’s appetite for risk. When there’s a lot of uncertainty in the headlines, people usually look to gold as a place to hide out, not because they’re speculating about its price, but because they’re just trying to feel a bit more secure. We’ve been seeing that play out over the last few days with buyers stepping in whenever the price dips a bit.
Geopolitical Stress Reinforces Safe-Haven Demand
The geopolitical situation remains a major factor in gold’s strong performance. The US government is becoming increasingly serious about the possibility of military action in Venezuela, tensions in the Middle East persist, and peace talks in Eastern Europe are going nowhere – all of which are contributing to a feeling of unease in the market.
The result isn’t panic, but it is enough to keep people in defensive mode – buying gold and other safe-haven assets, even when the price isn’t really going up much. That’s one reason why gold is acting more like an insurance policy than a tradable commodity – people are just trying to be safe, not make a profit.
Fed Caution Pressures the Dollar Ahead of NFP
The US economy is sending mixed signals, leading people to think the Federal Reserve might not be as tough on interest rates as it had expected. The S & P manufacturing PMI stayed the same at 51.8, but the ISM manufacturing PMI slipped to 47.9 – three months in a row now that manufacturing is actually getting smaller.
The markets are still pricing in two interest rate cuts later this year because the Fed is starting to see inflation slowing and the job market becoming a bit more uncertain. That’s weakening the US dollar, and that’s helping gold – the two are inversely related.
Everyone is now just waiting for the Nonfarm Payrolls report on Friday, and the forecasts are calling for 62k new jobs and an unemployment rate of 4.6%. If the number is a bit softer than people are expecting, that could put even more pressure on the dollar – and help gold. But if the number is a lot better than expected, that might slow gold down.
Gold Technical Outlook: Structure Remains Constructive
From a technical point of view, gold is trading around $4460, and is still sitting above that key support zone around $4445-$4450. The recent price action has shown higher lows and relatively small lower wicks, which suggests that people are buying in a pretty measured way – not just getting caught up in a big speculative frenzy.
Price action remains contained within that ascending channel, with the channel’s middle serving as a safety net beneath the price. The Fib levels are also good for gold, as it’s holding above the 50% retracement at $4413 and the 61.8% retracement at $4445. Those are often key levels where the trend starts to get going again.
Some key levels to keep an eye on are:
- Resistance: around $4497, then $4551
- Upside extension: $4585 – that’s the top of the channel
- Support: $4450, then $4375
The RSI is still above the middle line, suggesting momentum remains on gold’s side without getting too carried away.
Trade idea: Try to buy the dips down to $4450 – target $4520 – and stop out if the price goes below $4375.
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