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Home » News » Gold Price Forecast: XAU/USD extends losses to near $2,020 ahead of US Inflation

Gold Price Forecast: XAU/USD extends losses to near $2,020 ahead of US Inflation

by | Feb 14, 2024

Gold Price Forecast

The price of gold experiences a dip amid cautious market sentiment ahead of the release of US inflation figures. The strengthening US Dollar contributes to the decline in the value of the precious metal.

Investor preference for the US Dollar over safe-haven assets like gold persists amidst geopolitical tensions. Gold’s downward trend, initiated on January 7, continues as it nears $2,020 per troy ounce during the Asian trading session on Tuesday.

Anticipation of inflationary pressures in the US leads to speculation that the Federal Reserve may hold off on interest rate reductions at its March meeting. This expectation diminishes the appeal of non-yield-bearing assets such as gold. The market assigns a mere 14% probability of a rate cut in March, while a cut in May is estimated at around 60%.

Lorie K. Logan, President of the Dallas Federal Reserve Bank, recently stated that there is currently no urgency to lower interest rates. While acknowledging progress in controlling inflation, she emphasized the need for further evidence to ensure sustainability.

Meanwhile, escalating geopolitical tensions in the Middle East fuel demand for the US Dollar. Yemen’s Houthi rebels allegedly launched missiles at a ship bound for an Iranian port, causing minor damage but no injuries. Additionally, Israeli airstrikes in Rafah indicate a potential escalation in military operations, following the rejection of a ceasefire proposal by Hamas.

In the broader financial markets, investors are closely monitoring developments surrounding the US inflation data release. The outcome of this data is expected to provide insights into the Federal Reserve’s monetary policy stance. Any indications of higher inflation could potentially increase pressure on the Fed to consider raising interest rates, which may further dampen the appeal of gold as an investment.

Furthermore, market participants are also assessing the impact of geopolitical tensions on global economic stability. Any escalation in conflicts in the Middle East could lead to heightened volatility in financial markets, prompting investors to seek refuge in traditional safe-haven assets like the US Dollar instead of opting to sell gold.

Overall, the outlook for the gold price remains uncertain as it navigates through a complex web of economic indicators and geopolitical developments. Investors are advised to stay vigilant and monitor key events closely to make informed decisions regarding their investment strategies.

OVERVIEW
Today last price 2019.03
Today Daily Change -1.11
Today Daily Change % -0.05
Today daily open 2020.14

 

TRENDS
Daily SMA20 2027.77
Daily SMA50 2033.07
Daily SMA100 1990.83
Daily SMA200 1966.02

 

LEVELS
Previous Daily High 2027.65
Previous Daily Low 2011.94
Previous Weekly High 2044.63
Previous Weekly Low 2014.92
Previous Monthly High 2079.01
Previous Monthly Low 2001.9
Daily Fibonacci 38.2% 2017.94
Daily Fibonacci 61.8% 2021.65
Daily Pivot Point S1 2012.17
Daily Pivot Point S2 2004.2
Daily Pivot Point S3 1996.46
Daily Pivot Point R1 2027.88
Daily Pivot Point R2 2035.62
Daily Pivot Point R3 2043.59

Data source: Fxstreet

Conclusion:
In conclusion, the gold price is experiencing a decline, reaching near $2,020 per troy ounce amid cautious market sentiment and a strengthening US Dollar.

Investor preference for the US Dollar over safe-haven assets like gold persists due to geopolitical tensions. 

The anticipation of inflationary pressures in the US has led to speculation about the Federal Reserve holding off on interest rate reductions in March, diminishing the appeal of non-yield-bearing assets such as gold. 

The outlook for gold remains uncertain as it navigates economic indicators and geopolitical developments. Investors are advised to closely monitor events, especially the release of US inflation data, to make informed decisions regarding their investment strategies.

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by | November 19, 2024 |

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Gold Plummets Almost Three Percent After Trump Wins Election

by | November 7, 2024 |

Gold prices took a notable hit this week, sliding nearly three percent after the U.S. presidential election concluded with Donald Trump as the projected winner. Investors quickly moved capital into assets like the U.S. Dollar, stocks, and Bitcoin, reducing gold's appeal as a safe haven. As of Wednesday, the XAU/USD rate dropped to the $2,660s range, largely due to the strengthening dollar following Trump’s victory. With Trump securing 277 electoral votes to Vice President Kamala Harris’s 224, market sentiment suggests his economic policies could boost the U.S. dollar. Strength in the dollar typically pressures gold prices since gold is priced in dollars and tends to become more expensive for holders of other currencies. In addition to the dollar’s rise, capital is shifting from traditional safe-haven assets like gold toward riskier investments, including Bitcoin and equities. Trump’s assertions that he can negotiate peace in regions like the Middle East and Ukraine, though optimistic, may also contribute to the decreased demand for safe-haven assets.

Dollar and Stocks Rally While Gold Loses Favor

The markets seem to be responding positively to Trump's anticipated economic agenda, with the U.S. Dollar Index (DXY) climbing by more than 1.3%, reaching a peak of 105.32 on Wednesday. Stock futures also reacted with gains, with S&P 500 futures rising 2.2% to 5,909, and Dow 30 futures climbing over 1.3% to 42,770 in pre-market trading. The promise of potential tax cuts and economic growth has added to this market enthusiasm. Cryptocurrencies like Bitcoin have also surged, with Bitcoin reaching a record high of $75,407 amid expectations of a favorable regulatory environment under Trump’s administration.

Gold’s Price and Technical Levels Under Pressure

As capital flows toward stocks, the U.S. dollar, and Bitcoin, commodities such as gold, silver, oil, and copper are experiencing declines. Gold has broken through the key support level of $2,687, which previously served as resistance on September 26. A further drop could see gold testing its long-term trendline support around $2,605, though it remains within a broader upward trend on the long-term chart. For gold’s momentum to shift back up, it would need to reclaim its all-time high of $2,790, which could then pave the way toward the psychological resistance at $2,800, followed by $2,850. However, there are currently no technical signs of a reversal as gold continues its decline.

Long-Term Outlook for Gold

Despite the recent drop, gold’s long-term bullish outlook remains intact, and it may regain strength in the future if economic conditions shift. For now, though, the focus appears to be on assets expected to benefit directly from Trump’s economic policies.

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by | October 22, 2024 |

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