Gold price forecast (XAU/USD) have dropped to $2,435 during the early Asian session on Monday. This fall is due to expected rate cuts by the US Federal Reserve rate cuts and rising geopolitical tensions in the Middle East. Despite this drop, further decline might be limited.
Key Factors Affecting Gold Price forecast
Impact of US Economic Data
Recent US employment data has raised fears of a possible recession, leading to expectations of Fed rate cuts. Jim Wyckoff, a senior market analyst at Kitco Metals, notes a better-than-70% chance of a 50-basis-point rate cut in September. This follows weaker-than-expected Nonfarm Payrolls (NFP), which rose by 114K in July compared to 179K in June, missing the 175K forecast. The unemployment rate also increased to 4.3%, the highest since November 2021.
Influence of US ISM Services PMI
The US ISM Services Purchasing Managers Index (PMI), due on Monday, is expected to rise to 51.0 in July from 48.8 in June. If the data is stronger than expected, it could boost the US Dollar (USD) and limit the rise of USD-denominated gold price forecast.
Geopolitical Tensions and Safe-Haven Demand
Geopolitical tensions in the Middle East are likely to increase demand for gold as a safe haven. The BBC reports that several countries have advised their citizens to leave Lebanon due to fears of a broader conflict. Additionally, the US general overseeing American troops in the region has arrived as preparations continue for potential military actions involving Iran and Israel.
Conclusion
In summary, while gold prices (XAU/USD) are facing some downward pressure, several factors suggest that further declines might be limited. Anticipated Fed rate cuts and rising geopolitical tensions could support gold prices. For more details and updates, visit Daily Gold Signal or check out the latest daily gold updates.
