**Gold Price Forecast: XAU/USD Edges Higher Above $2,000 Amid Concerns Over US Economy**
*Article adapted and expanded from work by FXStreet’s Haresh Menghani*
—
Gold markets have turned bullish once again as ongoing doubts about the US economy, combined with global geopolitical concerns and shifting interest rate expectations, lend crucial support to the precious metal. Despite intermittent bouts of profit-taking and positive US economic signals, gold remains firmly above the psychologically significant $2,000 mark throughout much of the recent trading period. This article builds on analysis originally shared by Haresh Menghani on FXStreet, providing an in-depth look at the factors driving gold prices, technical outlooks, and potential future scenarios.
### Key Drivers Behind Gold’s Bullish Momentum
Recent rallies in XAU/USD are the sum of several interrelated drivers, with a heavy emphasis on macroeconomic risks and central bank policy. Among the main factors currently influencing gold are:
– **Persistent Economic Uncertainty in the US:**
Mixed economic data, especially regarding labor markets, consumer confidence, and inflation, have kept markets inflamed with uncertainty about the trajectory of growth and monetary policy.
– **Shifting Federal Reserve Rate Expectations:**
Though the US Federal Reserve has signaled a pause in further rate hikes, persistence in inflation and mixed economic indicators have made investors skeptical about aggressive easing any time soon.
– **Geopolitical Tensions Worldwide:**
Conflicts in the Middle East, tensions between major power blocs such as the US and China, and ongoing wars elsewhere continue to drive risk aversion, a key pillar for gold’s safe-haven demand.
– **Currency Market Fluctuations:**
The US dollar often sees an inverse relationship to gold prices. Recent weakness in the greenback, driven by dovish commentary from the Fed and other macro risks, has boosted gold’s relative attractiveness.
– **Central Bank Gold Purchases:**
Central banks, especially those in emerging markets, have been steadily acquiring gold as a way to diversify reserves—another floor under the market.
### Recent US Data and the Gold Reaction
A string of US economic data releases has done little to allay concerns about the durability of the post-pandemic expansion. Friday’s Nonfarm Payrolls data showed slower employment gains than anticipated, with figures falling short of consensus projections.
Other data has underlined this sluggishness:
– **Initial Jobless Claims** have trended upward.
– **Consumer Price Index (CPI)** data remains somewhat sticky, raising doubts about quick disinflation.
– **ISM Services Index** surprised on the downside, pointing to possible contractionary pressures in the broader economy.
These mixed signals have forced investors to reevaluate future Federal Reserve policy decisions, with the CME FedWatch tool now pricing in a greater probability of a steady, rather than hawkish, path in the next quarters.
### Gold and Interest Rate Correlations
Gold traditionally weakens in the face of rising rates since higher yields make non-yielding assets like gold less attractive. However, the current late-cycle dynamics have shifted this relationship slightly. The attitude among many investors is that:
– **An end to rate hikes** is imminent, with the first rate cuts potentially on the horizon if growth slows further.
– Even if rates remain higher for longer, the risk of economic hard landing and global instability supports gold as a defensive allocation.
This complex mix has left gold buoyed, particularly with real rates (nominal yields minus inflation) adjusting slowly in response to changing inflation expectations.
### Technical Analysis: Bulls in Control Above $2,000
From a technical perspective, XAU/USD has managed to hold above several key support levels, underscoring the bias toward further upside. Here are the main points on the XAU/USD daily chart:
– **Support Levels:**
– Immediate support is seen near $2,010, reinforced by the 50-period simple moving average.
– Additional support exists at $2
Read more on GBP/USD trading.