Gold Price Forecast: Bullish Buy Signal as Gold Holds Above $2,730 Amid Dollar Strength

Gold fell on Monday as the US dollar strengthened, making the metal less attractive to investors ahead of a big week of economic data that will influence the Fed’s next move.

The dollar index rose 0.2% and is on track for its best month since April 2022. A stronger dollar makes gold more expensive for international buyers so demand suffers.

Dollar Strength and Geopolitical Tensions Weigh on Gold’s Appeal

Tim Waterer, Chief Market Analyst at KCM Trade, said the dollar has rallied since the Japanese election and gold’s appeal has been dented.

“Gold can still get to $2,800 and beyond but it will need to get through a series of key US economic data this week that will impact the Fed’s interest rate decision,” Waterer said.

This week’s key data includes the US employment report, job openings and core PCE – the Fed’s preferred inflation measure. The labour market and inflation trends are key to the rate decision.

Rate Cut Expected Amid Uncertainty

According to the CME FedWatch Tool, the market is pricing in a 95% chance of a quarter point rate cut in November. Lower rates will make gold more attractive as it reduces the opportunity cost of holding non-yielding assets like gold.

Safe haven demand driven by geopolitical risks has also been supporting gold recently and took it to a record high of $2,758.37 last Wednesday.

Middle East tensions, especially after the Israeli airstrikes on Iranian positions, are still causing uncertainty and gold demand is increasing.

Israeli PM Benjamin Netanyahu said the strikes hit Iran’s defenses hard while Iran’s Supreme Leader Ali Khamenei said the damage was not as bad as reported.

Gold Price Forecast: Upward Trendline to Drive Buy Above $2,730

Gold prices are holding firmly above $2,730, with support from both the upward trendline and the 50-day Exponential Moving Average (EMA) positioned at $2,729.92.

This technical foundation suggests that bullish momentum could persist. Immediate resistance is marked at $2,747.66, with a higher target at $2,757.09 if buying interest remains steady.

A decline below $2,730 would find immediate support at $2,724.58, with further downside levels at $2,717.05 and $2,708.77.

The Relative Strength Index (RSI) currently stands at 52.10, indicating moderate bullish sentiment. For a stronger upward breakout, the RSI would need to trend higher.

The 50 EMA’s positioning below the current price supports the likelihood of continued buying interest, reinforcing a positive short-term outlook.

Key Price Levels:

• Pivot Point: $2,732.84
• Immediate Resistance: $2,747.66; Next Resistance: $2,757.09
• Immediate Support: $2,724.58; Next Support: $2,717.05

Conclusion: Gold’s resilience above the $2,730 level, combined with supportive technical indicators, suggests potential for a bullish continuation. However, this outlook could be challenged by upcoming U.S. economic data and a stronger dollar.