The gold price forecast (XAU/USD) continues to hover near its all-time high, fluctuating between $2,565 and $2,570 during Friday’s European session. This steady rise comes after a weaker-than-expected US Producer Price Index (PPI) report, which confirmed that inflation is easing. Investors are now betting on a larger interest rate cut from the Federal Reserve (Fed), boosting optimism for the gold market.
Simultaneously, falling US Treasury bond yields are pulling down the US Dollar, contributing further to gold’s upward momentum. The ongoing geopolitical uncertainties in the Middle East and Russia-Ukraine conflict are also supporting gold’s status as a safe-haven asset.
Fed Rate Cut Speculations Push Gold Higher
The softer US PPI report has shifted market expectations, leading to stronger beliefs that the Federal Reserve may implement a larger rate cut soon. With Treasury yields declining, gold has benefited from a weaker US Dollar, as it is a non-yielding asset that typically performs well in such situations.
Geopolitical Tensions Add to Gold’s Appeal
Along with the Fed news, geopolitical risks, particularly conflicts in the Middle East and the Russia-Ukraine war, are helping gold maintain its safe-haven status. These factors contributed to the breakout of gold’s previous multi-week trading range, setting the stage for further gains in the short term.
However, gold bulls may pause ahead of significant central bank meetings next week. The Fed’s decision on Wednesday will be followed by meetings from the Bank of England (BoE) and the Bank of Japan (BoJ), which could affect market movements.
Key Market Movers: Easing Inflation and Geopolitical Risks
On Thursday, the US Bureau of Labor Statistics reported a 1.7% rise in the annual headline Producer Price Index, missing forecasts of 1.8%. Core PPI data, excluding food and energy prices, also showed signs of cooling inflation. Additionally, the US Department of Labor revealed that initial unemployment claims reached 230,000 in the first week of September.
With inflation showing signs of easing, market participants now expect over a 40% chance of a 50-basis point rate cut by the Fed, according to the CME Group’s FedWatch Tool.
Global Tensions Amplify Gold’s Safe-Haven Status
Further complicating the outlook, tensions in the Middle East escalated as Israel increased airstrikes on Iranian-linked targets, while Hamas and Hezbollah launched attacks on northern Israel. Russia’s President Vladimir Putin also issued strong warnings regarding Ukraine’s potential use of Western-supplied missiles against Russian targets, which could lead to NATO’s deeper involvement.
With these global tensions in play, investors continue to favor gold as a safe-haven asset amid a backdrop of economic and geopolitical uncertainty.
Technical Outlook: Bulls Remain in Control
Technically, gold price forecast remains in an uptrend, having broken through a key resistance zone at $2,525-$2,530. With momentum indicators staying in positive territory, gold could test the $2,600 level soon, which acts as a significant resistance ahead of the Fed meeting next week.
On the downside, any corrections could see buyers stepping in near the $2,525 level. A drop below $2,485, however, may trigger further declines toward $2,470 or $2,456, marking key support levels to watch.
Conclusion
Gold remains strong, buoyed by a mix of easing US inflation, geopolitical risks, and expectations of a larger Fed rate cut. Next week’s Fed decision will likely be crucial for gold’s near-term direction.
For more insights on gold trading strategies, visit Daily Gold Signal. Stay updated with the latest market trends and analysis on our Daily Gold Update.
