Daily Gold (XAU/USD)
The dollar index (.DXY) dipped by 0.1% after reaching a two-week high on Friday, making gold more affordable for holders of other currencies. Non-yielding assets like gold tend to benefit in lower interest rate environments or during periods of economic uncertainty.
UBS analyst Giovanni Staunovo noted, “Market participants are awaiting the FOMC meeting and any guidance on future rate cuts.” He added that UBS anticipates a 25-bps cut this week, with additional cuts through next year, potentially driving gold prices toward $2,900/oz by mid-2025.
Focus Shifts to Fed Guidance
The Federal Reserve’s two-day meeting begins Tuesday, with markets pricing in a 97% probability of a 25-bps rate cut, according to the CME FedWatch Tool. Investors are closely monitoring Chair Jerome Powell’s comments for signals on the trajectory of interest rates into 2025. Lower rates could bolster demand for gold as an alternative investment, particularly as Treasury yields eased slightly on Monday.
Economic and Geopolitical Factors Add to Bullion’s Appeal
In addition to the Fed meeting, geopolitical uncertainty and upcoming economic data releases—including GDP figures, the PCE inflation index, and consumer sentiment—may influence gold prices this week. Citi analysts predict strong demand for gold and silver until U.S. interest rates stabilize near neutral levels, likely in late 2025 or early 2026.
Market Forecast: Bullish Outlook for Gold
Gold’s near-term outlook appears bullish, underpinned by expectations of a dovish Fed and persistent economic risks. While resistance at $2693.40 may cap gains initially, a dovish policy statement or weaker-than-expected U.S. data could pave the way for a breakout above this range, with potential upside targets near $2700. Traders should monitor Fed guidance and macroeconomic indicators closely this week.
