Gold price forecast feeling the pressure, dipping towards $2,680 during European trading on Friday. Various economic factors contribute to this slide, including increased USD demand and a general market preference for riskier assets. Despite lower US Treasury yields potentially keeping USD bulls cautious, these conditions still weigh heavily on gold price forecast. Gold appears set to end its second consecutive week with losses, struggling to sustain any recovery momentum despite recent attempts.
Strong USD and Risk-On Sentiment Weigh on Gold Prices
The current USD strength, boosted by market optimism around economic growth, overshadows the Federal Reserve’s ongoing accommodative approach. This dynamic has undermined gold’s appeal as a safe-haven asset, as traders show confidence in riskier investments, diminishing the demand for gold.
In addition, traders recently locked in profits from Trump-related market positions, which had previously boosted the USD to a four-month peak. This profit-taking sparked a USD pullback that briefly lifted gold on Thursday, but renewed USD strength kept gold’s recovery short-lived.
Fed Rate Cuts and Treasury Yields Affect XAU/USD Price Movement
The Federal Reserve’s recent decision to cut its overnight lending rate by 25 basis points, down to 4.50%-4.75%, did cause some USD softening, temporarily lifting gold. However, Fed Chair Jerome Powell’s statements did not strongly signal an end to the easing cycle, leading to speculation that rate cuts may continue into December. The CME FedWatch Tool currently shows a 75% likelihood of another rate cut by the year-end, which could further pressure Treasury yields and influence gold.
Lower Treasury yields generally support gold, but recent shifts in market sentiment and USD strength still weigh heavily on XAU/USD’s performance.
Technical Analysis: Key Levels for Gold Price Movement
From a technical perspective, gold’s recent momentum stalled near the 50% Fibonacci retracement level, close to $2,718. Breaking through this level could pave the way for a climb to $2,734 (61.8% Fibonacci level). Sustained buying interest above this point might lift XAU/USD beyond the $2,750 mark and approach $2,758-2,790, aligning with October’s peak.
On the downside, immediate support lies around $2,672, with stronger support near $2,660 and $2,643. A break below $2,643 could lead to further declines, potentially dropping gold towards its October lows around $2,602.
Conclusion
The gold market is currently navigating pressures from a robust USD and strong risk sentiment, making any significant recovery challenging. Lower Treasury yields offer some support to gold, but positive economic expectations and sustained USD demand could keep XAU/USD under pressure.
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