Gold (XAU/USD) maintained its upward trajectory, reaching an intraday high of $2,386 and stabilizing around $2,377, driven by rising concerns over the escalating conflict in the Middle East. This bullish momentum is further bolstered by the Federal Reserve’s cautious stance on inflation, with Chairman Jerome Powell emphasizing the need for stronger data before considering rate cuts, creating a mixed impact on gold prices.
Gold Prices Forecast: Technical Analysis
Gold (XAU/USD) is currently trading at $2,376.98, reflecting a 0.34% increase in the latest session. Technical analysis of the two-hour chart highlights critical levels, with the pivot point at $2,370.22 serving as essential support. Immediate resistance is identified at $2,381.39, followed by $2,393.00 and $2,402.46.
On the downside, immediate support is noted at $2,361.10, with further support levels at $2,349.76 and $2,340.05. Technical indicators maintain a bullish trend, with the 50-day EMA at $2,366.94 and the 200-day EMA at $2,348.09, suggesting continued upward momentum as long as prices remain above $2,370.22. A break below this level could trigger a significant sell-off.
Federal Reserve’s Cautious Stance and CPI Data Impact on Gold
Despite the Federal Reserve’s cautious stance during Tuesday’s congressional testimony, the US dollar struggled to gain momentum. Market participants are now keenly awaiting further comments from Federal Reserve Chairman Jerome Powell, along with speeches from Fed officials Michelle Bowman and Austan Goolsbee. Investors are also closely monitoring the upcoming release of the US Consumer Price Index (CPI) data, with forecasts indicating that Core CPI will remain steady at 3.45% year-over-year for June and 0.2% month-over-month. Powell reiterated that a rate cut would be premature without clear evidence that inflation is moving sustainably towards the Fed’s 2% target, posing potential challenges for non-yielding assets like gold.
Geopolitical Tensions in Gaza Boost Safe-Haven Demand for Gold
Heightened geopolitical tensions in the Middle East are driving up safe-haven demand for gold and silver. Israeli forces have continued their offensive in northern and central Gaza, with airstrikes on a tent encampment resulting in over 60 Palestinian casualties, according to Reuters. These actions complicate ongoing ceasefire negotiations and prolong the Gaza conflict, supporting gold prices amid increased uncertainty.
Trading Ideas and Short-Term Forecast
In the short term, gold prices are expected to remain bullish above $2,370.22, driven by ongoing Middle East tensions. Immediate resistance is at $2,381.39, with potential upward targets at $2,393.00 and $2,402.46. However, cautious signals from the Federal Reserve could introduce volatility. Traders should closely watch for any breaks below $2,370.22, which could lead to a sharp sell-off. Maintaining positions above this critical support level could present profitable trading opportunities amidst the current geopolitical and economic landscape.