Gold price forecast (XAU/USD) remain steady, hovering below their all-time highs, with the market eagerly awaiting key US economic data and a Federal Reserve decision. The outcome of these events will be crucial in shaping the trajectory of gold prices. This blog delves into why gold is pausing just below its peak and what could influence its future direction.
Gold below all-time highs before US data and Fed meeting
Gold price forecast have stabilized around the $2,570 level, remaining just below their record high of $2,589 reached on Monday. This price plateau comes ahead of the release of critical US economic data and the Federal Reserve meeting. The decisions made during this time are expected to have a significant impact on gold’s value.
The market is highly sensitive to any changes in US economic policies, and traders are looking for cues on how these events will shape the gold market.
Fed interest rate cut speculations driving gold surge
Gold prices shot up to $2,589 on Monday as speculation increased that the Federal Reserve might reduce interest rates by 0.50% at their upcoming meeting. Such a move could make gold a more attractive investment, as lower interest rates reduce the opportunity cost of holding gold, which does not provide interest or dividends.
Many analysts believe this potential rate cut is one of the key reasons behind gold’s recent surge. If the Federal Reserve takes aggressive measures to support the economy, gold prices could climb even higher.
US Retail Sales data holds key to Fed decision
The upcoming US Retail Sales data, expected at 12:30 GMT, could play a crucial role in the Fed’s decision on interest rates. If retail sales figures are better than the predicted -0.2%, it would signal that the US economy is performing better than expected. This scenario could lead to a smaller rate cut, which may not support further gold price increases.
On the other hand, if the data falls short, it will likely boost expectations of a more significant interest rate cut, positively impacting gold prices. In this case, gold could break through its previous all-time highs.
Analysts see a long-term gold bull market
Many financial experts are forecasting a bullish future for gold, with some believing it is entering a long-term uptrend. Analysts argue that the current market conditions resemble past periods when commodities experienced extended bull markets.
For instance, Michaël van de Poppe, a well-known market analyst, suggests that both gold and other commodities are poised for a 10-year bull market cycle. Additionally, Bank of America’s Jared Woodard agrees, stating that various global factors such as inflation and net-zero policies will drive commodity prices, including gold, higher in the coming years.
Technical Analysis: Gold remains in a bullish trend
From a technical standpoint, gold prices are still in a solid uptrend. Gold remains close to overbought territory, according to the Relative Strength Index (RSI), but it has not yet fully entered that zone. This indicates there might still be room for growth, though traders should be cautious before adding new long positions.
Should the market correct itself, key support levels for gold include $2,550, $2,544, and $2,530. Any pullback to these levels could represent a temporary pause before the broader bullish trend resumes.
Gold prices remain in a waiting phase, with investors looking to the upcoming US Retail Sales data and Federal Reserve decision for direction. The market anticipates that any Fed interest rate cuts could significantly affect gold’s outlook. Long-term, analysts remain optimistic about gold’s prospects, with some even predicting a decade-long bullish phase for commodities.
For more analysis on gold price movements, check out the updates at Daily Gold Signal.
