Gold Forecast: XAU/USD Poised for Break to Record Highs?
A clean breakout to new record highs above $2530 in gold would set the stage for a potentially strong continuation toward the upper-$2500s heading into the fall.
Share this:
Gold Key Points
- After a brief swoon back toward $2500 this morning, gold is once again trading near its record high at $2530.
- The latent risks of deficit spending in the world’s largest economy, even in times of relatively strong economic growth, has stoked interest in alternative stores of value like gold.
- A clean breakout to new record highs above $2530 would set the stage for a potentially strong continuation toward the upper-$2500s heading into the fall.
It’s been an interesting day amidst an interest month for gold.
The yellow metal briefly shed $20 on the release of this morning’s bigger-than-expected upward revision to Q2 GDP – ostensibly on the idea that the stronger US economy could keep the Fed from cutting interest rates as aggressively as some traders expected – but dip buyers have stepped in aggressively to push gold back toward its record high near $2530 as of writing.
One catalyst supporting gold prices is Fitch’s update to the US credit rating. The ratings agency affirmed the country’s AA+ credit rating, but also forecast that the US fiscal deficit would average 8% over the next three years. The latent risks of deficit spending in the world’s largest economy, even in times of relatively strong economic growth, has stoked interest in alternative stores of value like gold.
More broadly, the yellow metal has weathered the early-August panic well and continues to consolidate near record highs, potentially setting the stage for another leg higher if/when gold breaks out of its 2-week consolidation. Now, gold traders are looking ahead to Core PCE (tomorrow) and the Non-Farm Payrolls report (next Friday) to dial in the expected scale of Fed easing in the coming months.
Gold Analysis – XAU/USD Daily Chart
Source: TradingView, StoneX
Looking at the 4-hour chart, Gold’s recent consolidation pattern comes into focus. The precious metal is forming a potential Cup-and-Handle pattern over the last two weeks, showing strong buying pressure on any near-term dips.
As noted above, a clean breakout to new record highs above $2530 would set the stage for a potentially strong continuation toward the upper-$2500s heading into the fall.
-- Written by Matt Weller, Global Head of Research
Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/JPY weekly outlook: Quarter turn scrambles rates regime
USD/JPY’s tight relationship with front-end US rates broke down sharply last week, but quarter-turn flows and positioning suggest the disconnect may prove temporary.
Gold Update: XAU/USD Remains Under Pressure Even After the NFP Report
As the trading week comes to an end, weakness around gold price action remains evident in the short term. This can be seen in the performance of the past two sessions, where the metal has declined by approximately 0.3%. Although the move has not been particularly aggressive, it highlights that buying pressure continues to struggle to regain control of the market.
What Stretched 10-Year Yields Mean for Major Currency Pairs in Q4
U.S. 10-year Treasury yields are nearing a long-term resistance zone with overbought RSI readings, raising near-term pullback risk for the dollar.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.