Gold price forecast (XAU/USD) are showing modest gains, trading around the $2,330 range, with a 0.25% increase on Wednesday. This rise comes amid disappointing US economic data, which has raised hopes that the Federal Reserve might cut interest rates later this year. Globally, inflation rates are declining, and several central banks are also considering reducing interest rates. Lower rates make gold more attractive to investors by reducing the opportunity cost of holding non-yielding assets like gold.
Gold Prices Increase Amid Rate Cut Speculation
Gold price forecast inched higher on Wednesday, influenced by global economic data that points to a slowing economy and potential interest rate cuts. In the Eurozone, factory-gate prices fell by 1.0% in April, exceeding economists’ expectations of a 0.5% decline. Core costs, such as non-durables, also slowed to 0.1% from 0.6%. Inflation has been falling short worldwide, including US core PCE data and Swiss inflation, both of which missed expectations. Australia’s Q1 GDP growth was also below estimates, and the US labor market showed signs of weakening, as reflected in the JOLTS Job Openings and ADP Employment Change data.
Short-Term Bearish Outlook for Gold Despite Strong Fundamentals – TD Securities
Ryan McKay, Senior Commodity Strategist at TD Securities, maintains that while gold’s fundamentals remain strong, he holds a short-term bearish view. McKay points out that the trend signals for gold are no longer strictly upward, and there has been modest selling by CTAs amid recent price corrections. However, he expects this short-term trend to be contained, with a safety margin before the next selling trigger at $2,209/oz. Despite the negative short-term bias, McKay highlights strong demand for gold in Asia, particularly as a hedge against US dollar depreciation.
Gold Prices Near 50-Day SMA in Technical Analysis
Gold price forecast have been trading in a narrow range around the 50-day Simple Moving Average (SMA) over the past few days. This SMA has acted as a stabilizing force, keeping prices within a confined range. However, XAU/USD recently broke below a key trendline, potentially signaling the start of a short-term downtrend. Traders should monitor the price action around the 50-day SMA to see if this trendline breach leads to further declines.
Analyzing Gold Price Trends on the XAU/USD Daily Chart
A closer look at the XAU/USD daily chart reveals that the recent trendline break has set downside targets for gold prices. The first target is around $2,303, corresponding to the 0.618 Fibonacci extension of the previous move. A further decline could see prices drop to the $2,272-$2,279 range, which aligns with historical support levels. While the short-term trend appears bearish, medium and long-term trends remain bullish, indicating a possible recovery. However, a break above $2,362 is needed to challenge the short-term downtrend and suggest a return to upward momentum.
Conclusion
The gold market is currently influenced by global economic conditions, with expectations of interest rate cuts providing support for prices. While short-term technical signals suggest potential downside risks, strong fundamentals and demand, particularly in Asia, continue to underpin gold’s long-term bullish outlook.
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