Gold Price Forecast: XAU/USD hits a 5-month peak, dips to $1980s on safe-haven flows, weak USD

Gold price was shy of testing the $2000 troy ounce barrier on Friday amidst increasing geopolitical risks, as the conflict between Israel and Hamas is briskly spreading toward more countries in the region. At the time of writing, XAU/USD is trading at around $1980.20 after the yellow metal bounced from daily lows of $1972.12

XAU/USD climbs, fueled by Middle East conflicts and a weakening US Dollar

An escalation in the Middle East conflict keeps investors on their toes as Bloomberg reported, “The US said its military bases in Iraq and Syria are increasingly under attack.” Should be said that leaders from the region would meet in Cairo for a summit.

That and dovish comments by Federal Reserve (Fed) Chair Jerome Powell weighed on US Treasuries, particularly the 10-year benchmark note down seven basis points, at 4.929%, a tailwind for XAU/USD prices. The US Dollar Index (DXY), which tracks the performance of the USD vs. a basket of six currencies, has pared its earlier gains, turning red at 106.17, falling 0.07%.

The Fed parade continued Friday, as Atlanta Fed President Raphael Bostic has indicated the possibility of a rate cut in 2024, suggesting a potential shift in monetary policy if economic conditions warrant it. Meanwhile, Cleveland Fed President Loretta Mester has expressed that the Federal Reserve may be at or near the peak of its rate hike cycle. She emphasized that the central bank will closely depend on incoming data in its decision-making process for the next monetary policy meeting.

Aside from this, next week’s economic calendar will feature US flash PMI data, the release of Q3 Gross Domestic Product (GDP) on its preliminary reading, Durable Goods Orders, unemployment claims, and the Fed’s preferred gauge for inflation, the core PCE.

XAU/USD Price Analysis: Technical outlook

If Gold price extends its gains past $2000, Gold’s next resistance is seen at the May 10 daily high of $2048.15, followed by last year’s high of $2075.14, before challenging the all-time high (ATH) at $2081.82. If XAU/USD cannot stay above $2000, the first support would be the July 20 high at $1987.42, followed by the September 1 high turned support at $1952.95.