Gold Prices Forecast: 93% Chance of September Fed Rate Cut Boosts XAU/USD
James Hyerczyk

Gold prices are inching upward on Monday after reversing earlier gains, with the precious metal testing resistance near recent highs. Traders are closely monitoring U.S. Treasury yields and dollar movements while awaiting comments from Federal Reserve officials and crucial economic data.

Market Forces and Political Factors

The dollar’s strength, bolstered by safety bids following an attempted assassination of former U.S. President Donald Trump, is creating headwinds for gold. A robust dollar typically makes gold more expensive for foreign buyers. However, the impact of potential political outcomes on gold remains uncertain, with analysts suggesting that renewed trade tensions could benefit the metal.

Fed Watch and Economic Indicators

Investors are eagerly anticipating remarks from Fed Chair Jerome Powell and other officials this week. Key economic releases, including U.S. retail sales, industrial output for June, and weekly jobless claims, will be scrutinized for clues about the Fed’s future rate decisions. Ilya Spivak, head of global macro at Tastylive, notes that a significant miss in retail sales could reinforce expectations for rate cuts, potentially supporting gold prices.

Interest Rate Expectations

The CME Fedwatch Tool indicates a 93% probability of a Fed rate cut in September, which could boost gold’s appeal. Non-yielding bullion typically benefits from lower interest rate environments. U.S. Treasury yields remain mixed, reflecting investor uncertainty about the economic outlook and monetary policy direction.

Global Economic Considerations

China’s economic slowdown in the second quarter has fueled expectations for additional stimulus measures, which could impact gold demand from this key metals consumer.

Market Forecast

The short-term outlook for gold appears cautiously bullish, despite hovering near resistance levels. The critical level to watch is $2,450, with a breakthrough potentially leading to new record highs. However, gold must first overcome the recent high of $2,424.50 and the double-top formation at $2,431.59 to $2,450.13. This resistance zone is crucial for determining gold’s next significant move.

Upcoming Fed comments and economic data releases will likely be pivotal in shaping gold’s direction. If retail sales data disappoints, it could strengthen the case for rate cuts and provide support for gold prices. Traders should remain vigilant, as the interplay between economic indicators, Fed policy expectations, and geopolitical factors will continue to influence gold’s performance in the near term.

 

James Hyerczyk is a Florida-based technical analyst, market researcher, educator, and trader. James began his career in Chicago in 1982 as a futures market analyst for floor traders at the Chicago Board of Trade and the Chicago Mercantile Exchange and numerous brokerage firms. He has been providing quality analysis for professional traders for 36 years.

Mr. Hyerczyk is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks. He provides educational services for investors looking to improve their analysis and trading skills.

James is also the author of two books on technical analysis:  Pattern, Price & Time: Using Gann Theory in Trading Systems and Pattern, Price & Time:  Using Gann Theory in Technical Analysis.

James has a B.A. in Business Administration from St. Xavier University and an M.S. in Financial Markets and Trading from the Illinois Institute of Technology.

 

 

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