Gold (XAU) Daily Forecast: Market Insights and Expectations

Market Overview

Gold prices (XAU/USD) extended their decline on Monday, trading under pressure near $2,499.98 and hitting an intra-day low of $2,495.07. This downward trend is primarily due to positive sentiment in equity markets, which has reduced demand for the safe-haven metal. The risk-on mood stems from diminished fears of a U.S. recession, further undermining gold’s appeal. However, the downside remains limited by expectations of a dovish Federal Reserve.

Additionally, geopolitical risks from ongoing conflicts in the Middle East and the Russia-Ukraine war could continue to support gold prices. Traders are awaiting more insights into the Federal Reserve’s future plans, focusing on the upcoming release of the Fed’s meeting minutes on Wednesday and a speech by Fed Chair Jerome Powell at the Jackson Hole Symposium, which may provide important clues about interest rates and economic policies.

Gold Hits $2,500 High on Dovish Fed, Falls on Risk-On Sentiment

The U.S. dollar came under pressure as expectations for a dovish Federal Reserve and potential rate cuts grew. Recent data, including the Producer Price Index and Consumer Price Index, showed inflation trending downward, reinforcing predictions of a 25-basis-point rate cut in September. Despite strong U.S. retail sales easing recession fears, these inflation reports fueled speculation about Fed policy easing, which weakened the dollar and pushed gold prices to a record high above $2,500.

Additionally, the University of Michigan’s Consumer Sentiment Index rose to 67.8 in August, while inflation expectations remained steady. Comments from Federal Reserve officials also contributed to the dollar’s decline. Chicago Fed President Austan Goolsbee noted that the U.S. economy is not overheating, suggesting caution in maintaining restrictive policies. San Francisco Fed President Mary Daly emphasized a gradual approach to lowering borrowing costs, aligning with market expectations of upcoming Fed easing.

These developments initially boosted gold prices above $2,500, but gold has since declined as risk-on sentiment shifted investor focus away from safe-haven assets.

Short-Term Forecast

The outlook is bearish below $2,505. A break above this level could reignite bullish momentum, but watch for a potential retracement if prices remain under $2,500.

Gold Prices Forecast: Technical Analysis

Gold (XAU/USD) is currently trading at $2,499.98, and it has recently violated a triple top pattern around the $2,477 level. The price is holding near the $2,500 mark, which places it in the overbought zone, suggesting the potential for a slight bearish correction. If the selling pressure increases, we could see gold retrace toward the $2,475 support level.

Immediate resistance is at $2,524.33, with further resistance at $2,540.02 and $2,557.00. On the downside, support levels are found at $2,477.85, $2,450.85, and $2,431.60. The 50-day EMA at $2,452.58 and the 200-day EMA at $2,431.21 provide additional support.