The gold price trends is influenced by U.S. jobless claims and Federal Reserve policy. As the U.S. dollar and Treasury yields retreat, gold prices have shown resilience. This is driven by rising expectations for a Federal Reserve interest rate cut. With these dynamics in play, let’s delve into the factors affecting gold prices and what to expect in the near term.
Gold Price forecast Firm Amid Rate-Cut Bets
Gold price trends showed strength on Thursday as the dollar and Treasury yields declined. This shift is due to increased speculation that the Federal Reserve may initiate an interest rate cut cycle in September. Spot gold prices rose, ending a five-session losing streak, while U.S. gold futures also climbed. Investors are closely watching the 50-day moving average at $2368.80, a crucial support level since March. If gold falls below this mark, a significant drop of $50 or more could occur.
Dollar and Treasury Yields Retreat
The dollar index decreased by 0.1%, making gold more affordable for international buyers. Simultaneously, the 10-year U.S. Treasury yield dropped, reducing the cost of holding non-yielding bullion. Despite a 3% drop in gold prices earlier this week due to global sell-offs driven by U.S. recession fears, the shallow correction has renewed investor confidence and long positions.
Rate-Cut Expectations and Jobless Claims
Leading brokerages like J.P. Morgan, Citigroup, and Wells Fargo project a 50-basis-point interest rate cut by the Federal Reserve in September. This comes after last week’s U.S. jobs data. Investors are awaiting the weekly U.S. jobless claims report, which may influence gold prices further. The expected decrease in initial jobless claims to 240,000 from 249,000 signals potential economic stability.
Impact of Geopolitical and Economic Uncertainties
Gold, a traditional safe-haven asset, benefits from geopolitical and economic uncertainties. Recent events, such as the killing of senior members of Hamas and Hezbollah, have heightened concerns about potential retaliatory actions, boosting gold’s appeal. Additionally, ongoing worries about U.S. economic data and debt issues are likely to support gold prices forecast.
Market Forecast: Bullish Outlook
In the short term, gold is anticipated to trade higher due to expectations of rate cuts and economic uncertainties. If the Federal Reserve indicates a dovish shift in its upcoming meetings, gold prices may reach new highs. However, a significant price drop might be necessary to attract new investments. Overall, the current environment suggests a bullish outlook for gold as traders prepare for key economic data releases and Fed decisions.
Technical Analysis
XAU/USD is trending upward on Thursday, supported by the 50-day moving average at $2368.97. Short-term support is at a pivot of $2380.54. If the 50-day MA fails, prices could potentially drop to $2293.69 to $2277.34. Despite support levels at $2380.54 to $2368.97, XAU/USD still faces resistance. A key level to surpass is $2418.47, which could lead to testing the double-top at $2477.73 and $2483.74.
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