Gold Price Forecast: XAU/USD Hovers Near $2,652 Amid US Rate Cut Expectations and Geopolitical Tensions

During the European trading session, gold prices (XAU/USD) are hovering near $2,652 as investors react to a more risk-on sentiment, spurred by China’s new economic stimulus.

Investors are shifting to higher-yielding assets like stocks and bonds, making gold less attractive as a safe-haven asset. However, a sharp decline in gold prices isn’t expected due to the weakening U.S. dollar, driven by the Federal Reserve’s dovish stance.

Additionally, ongoing geopolitical tensions in the Middle East and uncertainty ahead of the U.S. presidential election continue to support demand for gold, as investors seek refuge in safer assets amidst global uncertainty.

Gold prices have reached a record high, trading at $2669.70. This new rise is supported by a decline in U.S. consumer confidence to its lowest level since August 2021, reflecting concerns about the labour market & economic outlook says https://t.co/Ue3kwFtlQd @Pcreuze @jogatsby

— MPE-Média (@mpemediatwit) September 25, 2024

US Economic Data and Rate Cut Expectations Push Gold Higher

Gold has also gained traction from weak U.S. economic data. The Richmond Manufacturing Index dropped to -21, and the Consumer Confidence Index fell to 98.7 in September, reflecting growing concerns about the economic outlook. With the market now estimating a 75% chance of a 50-basis-point rate cut by the Federal Reserve in November, the U.S. dollar continues to face downward pressure.

Key events to watch include speeches from Fed Chair Jerome Powell and the release of the U.S. Personal Consumption Expenditure (PCE) Price Index, which could further impact gold prices by influencing investor sentiment on future rate cuts.

Geopolitical Tensions Bolster Gold as a Safe-Haven Asset

Ongoing geopolitical tensions in the Middle East—specifically the conflict between Israel and Palestine—are also keeping demand for gold strong. The rising casualties and escalating conflict are driving investors toward safer assets like gold. As the U.S. presidential election approaches, political uncertainty adds further complexity to the global outlook, supporting gold prices.

With over 41,000 casualties reported in Gaza and rising instability, gold remains a preferred safe-haven asset amidst ongoing global tensions.

Gold Rises to Record High as US Data Support Deeper Rate Cuts https://t.co/tqtvnrcseU

— Shehzad Younis شہزاد یونس (@shehzadyounis) September 25, 2024

Technical Outlook for Gold

Gold (XAU/USD) is currently trading at $2,652.43, down 0.18%. Key levels include:

• Immediate resistance: $2,670.90
• Immediate support: $2,648.18
• 50-day EMA: $2,637.30

Traders are recommended to adopt a cautious stance, with selling opportunities below $2,657 and a target of $2,640, while placing a stop-loss at $2,674.