**Gold Price Forecast: XAU/USD Climbs Toward $2,350 on Fed Rate Cut Bets, Geopolitical Risks**
*Originally reported by Eren Sengezer, FXStreet*
Gold has been on a strong upward trajectory, climbing close to the $2,350 mark on renewed bets of Federal Reserve rate cuts and intensifying geopolitical risks. Market participants are closely monitoring policy signals from the Federal Reserve and tracking escalating tensions in the Middle East and Ukraine, both of which are underpinning demand for the yellow metal. As XAU/USD continues to gain ground, investors are analyzing key technical and fundamental factors driving gold’s momentum.
## Gold Price Surges as Rate Cut Speculation Grows
Gold is traditionally viewed as a safe-haven asset, meaning its rally often coincides with periods of uncertainty or shifting central bank policies. Over recent weeks, the combination of dovish expectations from the Federal Reserve and persistent global risks has created an ideal environment for gold bulls.
### Main Catalysts Driving Gold Higher
The following factors are currently influencing gold prices:
– **Federal Reserve Rate Cut Bets**
Recent economic data in the United States suggest that inflation is moderating. This trend, combined with mixed labor market reports, has prompted investors to price in potential interest rate reductions from the Federal Reserve in the latter half of the year.
– **Geopolitical Risks in the Middle East and Europe**
Tensions flare-ups in the Middle East, especially involving Israel, Iran, and ongoing hostilities elsewhere in the region, as well as the Russia-Ukraine war, continue to foster uncertainty. Market participants often turn to gold as a hedge against the risk of escalation.
– **Weakening US Dollar**
A softening US Dollar tends to support gold prices by making greenback-denominated bullion cheaper for foreign investors. As expectations for lower US rates intensify, the currency has come under pressure.
– **Safe-Haven Demand Amid Market Volatility**
Volatility in global equities and concerns around the pace of global economic recovery further enhance gold’s appeal.
### Federal Reserve Policy Outlook
Expectations are mounting that the US central bank could begin cutting rates as soon as the fourth quarter of 2024, provided inflation continues to decelerate. This view has gained traction after a series of benign inflation prints and several Federal Reserve officials hinting at a possible dovish tilt later in the year. Lower rates tend to reduce the opportunity cost of holding non-yielding assets like gold.
Some factors impacting Fed rate cut expectations include:
– **Moderating Inflation:** Consumer Price Index (CPI) reports have shown inflation cooling from last year’s peaks, giving the Fed room to maneuver.
– **Slowing Economic Growth:** Recent GDP numbers suggest the US economy is starting to slow, prompting speculation that monetary tightening cycles may be reversed sooner rather than later.
– **Mixed Labor Market Data:** While employment remains resilient, some evidence points to a gradual softening which the Fed watches closely.
As a result, traders have now largely priced in at least one rate reduction by the end of the year, providing further tailwinds for XAU/USD.
### Geopolitical Risks Remain Front and Center
Another significant driver for gold is the ongoing geopolitical instability:
– **Middle East Tensions:**
Clashes involving Israel and Iran, continued proxy confrontations, and the risk of broader regional conflict keep safe-haven flows elevated.
– **Russia-Ukraine War:**
Ongoing hostilities between Russia and Ukraine persist, contributing to a general sense of unease in global markets.
– **Potential Supply Chain Disruptions:**
Strife in these key regions has the potential to disrupt global supply chains, adding to concerns over inflation and market instability.
### US Dollar Weakness
– As investors anticipate looser monetary policy, yields on US Treasuries have retreated, exerting downward pressure on the Dollar Index (DXY).
– Foreign demand for US
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