XAU Daily Forecast: Bullish Momentum as Gold Targets Key Resistance of $2,670

Gold (XAU) maintains its bullish momentum, approaching the $2,670 resistance level amid easing US inflation and geopolitical uncertainties.

XAU Bullish Trend Strengthens Amid Rate Cut Speculation

Gold (XAU) kicked off the week with a strong performance, reaching $2,660 as inflation data from the US supported the possibility of a Federal Reserve interest rate cut. The Producer Price Index (PPI) for September recorded a 1.8% rise in overall prices and a 2.8% increase in core prices, both exceeding expectations but still indicating a slowdown in inflation.

The likelihood of a rate cut in November has surged, with the CME Group’s FedWatch Tool showing a 90% chance of a 25 basis point reduction. This potential easing of monetary policy has strengthened the outlook for gold, further driving its appeal as an investment.

The US Dollar softened due to the favorable inflation outlook, although the 10-year US Treasury yield remained above 4%, showcasing cautious market sentiment. Typically, a weaker dollar enhances gold’s value by making it more affordable for international buyers. However, the high Treasury yields continue to cap gold’s upward potential.

Investors are closely watching these macroeconomic indicators, as they provide vital clues about the direction of gold prices in the coming days.

Geopolitical Tensions and China’s Struggles Boost XAU Demand

Gold’s (XAU) safe-haven status has been reinforced by rising geopolitical tensions, particularly in the Middle East, which have sparked demand for safer investments. Additionally, economic uncertainty in China, despite recent stimulus efforts, has further bolstered gold’s appeal.

China's September Consumer Price Index (CPI) remained flat, with a mere 0.4% annual increase, falling short of market expectations. This sluggish economic recovery raises concerns about global economic stability, making gold an attractive option for investors seeking to hedge against market volatility.

Currently trading at $2,660, Gold (XAU) is up 0.31% and maintaining strong momentum. Immediate resistance is at $2,670.56, followed by additional barriers at $2,677.72 and $2,685.66.

On the downside, key support levels are set at $2,650.43 and $2,638.10, with the 50-day Exponential Moving Average (EMA) aligning closely at $2,638.47. These levels will be critical for traders to watch in the event of a price correction.

XAU Forecast: Bullish Continuation or Selling Pressure?

If gold (XAU) continues to hold above $2,662, a bullish continuation is highly likely, supported by the formation of the “three white soldiers” candlestick pattern. This pattern typically signals the continuation of an uptrend, giving confidence to traders betting on further gains.

However, should gold dip below $2,662, selling pressure could intensify, potentially pushing prices toward the key support zone of $2,638.10. Traders should keep an eye on the 50-day EMA, as any break below this level could signal a shift in momentum, leading to a more bearish outlook.