Forecasted XAU/USD prices for gold indicate a restrained start

Gold Prices Dip Amidst Rising Concerns in the Middle East

 

Gold Prices Affected by Israel-Hamas Tensions

 

Gold prices experienced a significant increase recently due to concerns between Israel and Hamas. However, since then, there hasn’t been much new information to escalate the situation. As a result, gold prices have slightly decreased. But if the situation worsens in the Middle East, gold prices may rise again.

 

US Treasury Yields Impact Gold Prices

 

The increase in US real yields has also affected gold prices. Since gold is a non-interest bearing asset, when US Treasury yields go up, it puts pressure on gold prices.

 

Federal Reserve’s Influence on Gold Prices

 

The Federal Reserve has played a role in shaping gold price expectations. Currently, the market expects the Fed to cut interest rates by around 165 basis points by the end of 2024. This change suggests that the Fed’s hiking cycle may have reached its peak. If weaker US economic data and less aggressive Fed talk support this narrative, it could continue to boost gold prices. This week, the focus will be on US retail sales data, speeches by Fed Chair Jerome Powell, and jobless claims data.

 

Technical Analysis of Gold Prices

 

Looking at the daily XAU/USD price action, we can see that the pair is respecting a longer-term trendline resistance zone, which aligns with the 200-day moving average. Given the external factors at play, some investors may be looking for opportunities to buy gold at support levels. However, since the war in the Middle East is mostly contained within the region, gold may not appreciate as much as some would expect. But if the war spills over and involves other nations, it could lead to a sharp rise in gold prices.