Gold price forecast saw a slight dip on Friday, reversing some of the earlier week’s gains. This pullback came as U.S. Federal Reserve officials hinted at holding off on any immediate interest rate cuts. Earlier in the week, gold prices surged close to $2,400 per ounce, driven by disappointing U.S. economic data. However, by Thursday and Friday, gold prices began to recede.
Fed’s Caution on Interest Rate Cuts Slows Gold Price Forecast Momentum
The decline in gold price forecast followed after Federal Reserve officials took a cautious approach, dismissing the possibility of swift rate reductions. They highlighted the need for stronger evidence of declining inflation, despite modest inflation data from April. This caused traders to rethink the likelihood of a rate cut in September, strengthening the U.S. dollar and pushing Treasury yields higher. Despite this short-term decline, gold still ended the week up by 0.7%, remaining near its all-time high of over $2,430 per ounce, although reaching that level in the near term seems unlikely.
U.S. Economic Factors Impacting Gold Price Forecast (XAU/USD)
On Friday, gold (XAU/USD) reversed from its recent highs near $2,400. The earlier rise was fueled by April’s weaker U.S. inflation data, which initially raised hopes for Federal Reserve rate cuts. However, with Fed officials leaning toward maintaining higher interest rates, the U.S. dollar strengthened, reducing the appeal of gold. With little new U.S. economic data expected, traders are now focusing on comments from key Federal Reserve officials, including Kashkari, Waller, and Daly.
Other Economic Indicators Affecting Gold Prices
During the week ending May 11, initial jobless claims in the U.S. rose to 222,000, surpassing both the previous week’s figures and the forecast of 220,000. Meanwhile, U.S. housing starts in April jumped by 5.7%, though building permits dropped by 3%. Several Federal Reserve members, such as Atlanta Fed President Raphael Bostic and Cleveland Fed President Loretta Mester, offered cautious views on inflation trends, emphasizing the need for more comprehensive data. Richmond Fed President Tom Barkin noted that maintaining higher borrowing costs is essential to managing inflation. These factors shifted market sentiment, with a 75% probability now being placed on a Fed rate cut in September, up from 65% earlier in the week. According to the CME FedWatch Tool, markets expect at least one 25 basis point cut by the end of the year.
Forecast for Gold Prices
Gold (XAU/USD) is currently trading at $2,378.755, representing a 0.15% rise for the day. On the 4-hour chart, the key support level lies at $2,373.92. Resistance levels stand at $2,395.84, followed by $2,410.62 and $2,425.87.
If gold prices fall, initial support can be found at $2,357.95, with additional support at $2,336.74 and $2,318.86. Technical indicators show a balanced outlook, with the 50-day Exponential Moving Average (EMA) at $2,354.84 and the 200-day EMA at $2,312.01. A Doji candle forming above the $2,373 pivot point is expected to trigger a buying opportunity.
For more updates on gold prices and forecasts, visit the Daily Gold Signal for insights. For daily updates on gold market trends, check out Daily Gold Updates.
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