The price of gold continues its impressive ascent, hovering near record peaks around $2,500 per troy ounce. The primary catalyst behind this rally is the intensified demand for safe-haven assets amidst ongoing geopolitical tensions.
The spotlight remains on the Middle East conflict, with U.S. Secretary of State Antony Blinken participating in ceasefire talks between Israel and Gaza. However, fluctuating news from the region raises doubts about the success of these negotiations, boosting gold’s appeal as a secure investment.
Market expectations surrounding the U.S. Federal Reserve’s upcoming actions further support gold’s rally. Despite robust economic indicators, inflation is nearing the Fed’s target, leading to speculation of forthcoming interest rate reductions.
Investors are anticipating a 25 basis point cut in September, with the potential for additional cuts at the year’s remaining meetings, totaling 75–100 basis points.
This week is crucial for gold investors, with the Federal Reserve releasing minutes from its latest meeting and a scheduled speech by Fed Chairman Jerome Powell. These events are expected to clarify the Fed’s stance on monetary policy, influencing XAU/USD’s price forecast trajectory.
Technical Analysis of XAU/USD
Gold has completed a growth structure, hitting $2509.00 on the H4 chart. Currently, a consolidation pattern is forming below this peak, with expectations leaning towards a downward breakout towards $2426.44, potentially extending down to $2347.55.
The bearish outlook is supported by the MACD indicator, where the signal line is set for a downward trajectory from above the zero level.
On the H1 chart, gold has reached the upper boundary of its latest growth wave at $2509.77, followed by a tight consolidation range formation. Anticipations are set for a downward movement, targeting a decline to $2468.00 with a further potential to reach $2426.90.
This bearish perspective aligns with the Stochastic oscillator’s signal line, poised to drop from below 80 to 20, indicating a potential selloff in the near term.
As geopolitical events unfold and the Federal Reserve’s monetary policy becomes clearer, gold’s price dynamics are expected to remain a focal point for investors seeking stability in uncertain times.
Analysis: Gold prices are soaring due to increased demand for safe-haven assets amidst geopolitical tensions and speculation of interest rate cuts by the Federal Reserve. Technical indicators suggest a potential downward movement in the near term. Investors should closely monitor geopolitical developments and Fed announcements to make informed decisions about their investments.