Gold price forecast (XAU/USD) have slipped to $2,735 during early Asian trading on Monday, breaking a two-day upward trend. This decline comes amid escalating geopolitical tensions and a volatile economic landscape. However, these factors may limit further downside in gold prices, with demand likely to stay strong among investors and central banks worldwide.
Current Gold Price Status
As the new week begins, the price of gold is holding below the $2,750 mark, a level influenced by various global events. Despite this dip, uncertainty in the geopolitical sphere may keep gold attractive as a safe-haven asset. Following a recent incident, Israeli Prime Minister Netanyahu announced that an attack on Iran significantly damaged its defense systems. In response, Iran has vowed to retaliate, albeit without seeking an expanded conflict, according to CNN’s coverage. This instability could maintain support for gold, especially as the U.S. The presidential election introduces an additional element of uncertainty.
Central Banks and Gold Demand
Gold demand has also been bolstered by increased purchases from central banks. According to the World Gold Council, central banks globally bought over 1,000 tonnes of gold in each of the last two years. China remains one of the largest buyers, with substantial purchases aimed at strengthening its reserves. This trend of robust demand from central banks and individual investors alike underscores gold’s appeal as a secure asset in uncertain times. For more information on gold price forecast, visit our daily gold updates.
Federal Reserve Influence on Gold Prices
While gold continues to attract investors, the U.S. Federal Reserve’s interest rate strategy also impacts its price. Despite economic resilience, the Fed has adopted a cautious approach to rate cuts, which has somewhat reduced gold’s upward potential. As the CME FedWatch tool shows, market participants are pricing in a 97.7% probability of a 25 basis points rate cut in November. This reduced likelihood of aggressive rate cuts limits gold’s short-term upside, as a slower rate reduction generally strengthens the U.S. dollar, impacting demand for gold.
Gold’s price trajectory remains uncertain but promising for investors seeking stability. With factors like geopolitical risks and rising central bank demand, gold is likely to retain its safe-haven appeal. For additional insights, check out our gold trading resources.
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