On Thursday, the gold price forecast(XAU/USD) went up slightly after dropping for six days in a row, hitting a low of around $2,605-$2,604. However, this increase seems weak and may not last long. Many believe the Federal Reserve (Fed) will cut interest rates by 25 basis points (bps) in November. This strengthens the US Dollar (USD) and makes it harder for gold to rise, as gold doesn’t pay interest.
Traders are waiting for the US CPI impact on gold report, which is due later today. This report will help guide the Fed’s decision on interest rates next month. In addition, tensions in the Middle East are also likely to affect gold price forecast, as investors often turn to gold during times of uncertainty.
Gold Prices May Stay Weak Before US Inflation Data
During the September Federal Reserve rates meeting, most members supported a large 50 bps rate cut, feeling confident inflation will reach their 2% goal. However, some preferred a smaller 25 bps cut because of strong economic growth and low unemployment.
The larger rate cut boosted the US Dollar, but there are still uncertainties. Some Federal Reserve officials, like Dallas Fed President Lorie Logan, are cautious about the economy and favor smaller interest rate cuts. Others, like Boston Fed President Susan Collins, believe future decisions will depend on the data. Traders are now expecting a 25 bps rate cut in November, although some think the Fed might choose to keep rates steady.
Meanwhile, bond yields in the US are rising, with the two-year and 10-year Treasury yields at their highest in months. Ongoing tensions between Israel and Iran also push investors towards gold as a safer option.
Technical Outlook – Gold Could Drop if Key Levels Are Broken
From a technical view, gold price forecast falling below $2,630 indicates a possible downtrend. Although some indicators are still positive, gold is holding just above the crucial $2,600 level. If it drops below this point, the gold price could continue declining to $2,560, $2,530, and eventually to $2,500.
On the other hand, if gold goes up, it will face resistance at the $2,630-$2,635 level. Stronger resistance is expected at $2,657-$2,658. If gold breaks these levels, it could reach the $2,670-$2,672 zone, with the next target being the all-time high of $2,685-$2,686. Breaking above $2,700 would signal that the upward trend is continuing.
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