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The Gold Price Forecast remains clouded in uncertainty as the market navigates countervailing forces. While the US Dollar’s weakness and subdued Treasury yields offer some support, a risk-on market sentiment and receding geopolitical tensions are dampening the safe-haven appeal of gold.
Gold Price Forecast: US Dollar Weakens, Gold Price Stumbles
The US Dollar, often seen as an inverse play on gold, has been on the decline recently. This could have buoyed the Gold Price Forecast. However, the rally fizzled out as risk appetite surged on Wall Street in anticipation of positive earnings reports from tech giants.
This risk-on mood, fueled by positive news from Tesla, overshadowed concerns about a wider Middle East conflict, typically a catalyst for gold buying. Even with the Dollar’s weakness, gold prices slumped to two-week lows near $2,300.
Focus Shifts to US Economic Data
The market’s attention has now shifted towards key US economic data releases, with the upcoming Durable Goods figures and the first-quarter GDP report taking center stage. Disappointing preliminary PMI data for April has raised concerns about US economic resilience, potentially impacting Fed rate cut expectations and influencing the Gold Price Forecast.
Currently, markets anticipate the first Fed rate cut in September, with a total easing of only 40 basis points this year, significantly lower than earlier projections. This shift in Fed expectations could influence the Gold Price Forecast in the coming months.
Gold Price Forecast: Technical Analysis
On the technical front, the Gold Price Forecast hinges on the critical support level of $2,318, represented by the 21-day Simple Moving Average (SMA). A bounce off this level, coupled with an RSI (Relative Strength Index) hovering near 56.50, suggests a potential rebound for gold prices.
The initial resistance lies at the previous day’s high of $2,334, followed by the psychological barrier of $2,350. A decisive break above these levels could propel gold prices towards the $2,360-$2,365 resistance zone.
Conversely, a break below the $2,318 support could see gold prices slide towards the previous day’s low of $2,291. If the selling pressure intensifies, the last line of defense for bulls might be the early April low near $2,265.
A Balancing Act for Gold
The Gold Price Forecast remains in a wait-and-see mode. The interplay between US economic data, Fed rate cut expectations, and the overall risk sentiment will determine the direction of gold prices in the near future. While the weaker Dollar offers some support, the lack of geopolitical tensions and a risk-on market environment are currently acting as headwinds. Key US economic data releases will be crucial in shaping the Gold Price Forecast in the coming days and weeks.
