Gold Price Forecast: XAU/USD soars on geopolitical tensions, dovish Fed rate cut speculation

Source Fxstreet
  • Gold's rally fueled by increased geopolitical risks in the Red Sea region and a shift towards risk-averse trading.
  • US Producer Price Index data falls short of expectations, bolstering speculation of imminent Fed policy easing.
  • Decline in US Treasury yields and a mixed Dollar performance further support Gold's upward momentum.

Gold price rallied sharply on Friday, spurred by a risk-off impulse due to tensions arising around the Red Sea, as the US and the UK retaliated against Houthi's attack on a US ship on Thursday. Therefore, XAU/USD’s refreshed five-day highs at around $2062, and trades at $2045, up 0.70%.

XAU/USD hits five-day high at $2062, sponsored by mixed US data, increased odds for Fed rate cuts

Traders bought Gold due to the escalation of the conflict in the Middle East. Besides that, the yellow metal was boosted by the drop in US Treasury bond yields, as bets that the US Federal Reserve would cut rates aggressively beginning as soon as March increased.

In the meantime, the latest inflation report in the United States (US), revealed that prices paid by producers, also known as the PPI, slid below estimates, with the PPI monthly dropping -0.1%, below forecasts of 0.1%. In a year-over-year number, the PPI rose by 1%, below forecasts of 1.9%. Core PPI was unchanged at 0% compared with November’s data but below estimates, while year-over-year figures dipped below projections and the previous reading, from 2% to 1.8%.

Although today’s data is supportive of a dovish approach by the Fed, on Thursday consumer inflation data was higher than expected. It should be said that some Fed officials made comments on December’s data, and pushed back against expectations for a rate cut in March.

The yellow metal was also supported by the drop in US yields, particularly the short-end of the curve, with the 2-year Treasury note plunging almost ten basis points to 4.16%, reducing the US 2s-10s yield curve inversion. That weighed on the Greenback, which according to the US Dollar Index (DXY) clings to decent gains of 0.15%, up at 102.47.

XAU/USD Price Analysis: Technical outlook

Gold’s daily chart remains upward-biased after bouncing off the weekly lows of $2013, which exacerbated XAU’s rally toward the $2060 area, before sliding toward the 20-day moving average (DMA) at $2046. If buyers crack that level and the $2050 figure, that could open the door to retesting weekly highs. Further upside is seen at $2100. On the flip side, XAU/USD’s buyers' failure to reclaim $2050 could open the door for further losses. First support is seen at today’s low of $2028, followed by the week’s low of $2013.

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Gold Price Forecast: XAU/USD recovers some lost ground above $2,050, US ADP report eyedGold price (XAU/USD) bounces off the multi-day lows near $2030 per ounce and hovers around $2,042 during the early Asian session on Thursday.
Author  FXStreet
Jan 04, 2024
Gold price (XAU/USD) bounces off the multi-day lows near $2030 per ounce and hovers around $2,042 during the early Asian session on Thursday.
placeholder
Gold prices rise to over one-month high on softer dollar, bond yieldsGold prices climbed on Tuesday to their highest point in more than a month, supported by a weaker U.S. dollar and lower Treasury yields.
Author  Reuters
Jul 22, 2025
Gold prices climbed on Tuesday to their highest point in more than a month, supported by a weaker U.S. dollar and lower Treasury yields.
placeholder
Gold holds steady below $4,150 amid elevated US yields Gold price (XAU/USD) trades on a flat note near $4,140 during the early Asian session on Tuesday. Pressure from a stronger US Dollar (USD) and elevated US Treasury yields was offset by reduced expectations of a Federal Reserve (Fed) rate hike this month.
Author  FXStreet
Oct 06, Tue
Gold price (XAU/USD) trades on a flat note near $4,140 during the early Asian session on Tuesday. Pressure from a stronger US Dollar (USD) and elevated US Treasury yields was offset by reduced expectations of a Federal Reserve (Fed) rate hike this month.
placeholder
WTI rises to near $89.50 as Middle East supply threats offset Persian Gulf recoveryWest Texas Intermediate (WTI) oil price extends its gains for the second successive day, trading around $89.50 per barrel during the Asian hours on Wednesday. Crude oil climbed as persistent risks to Middle East energy flows overshadowed signs of rising supply from the region.
Author  FXStreet
Oct 07, Wed
West Texas Intermediate (WTI) oil price extends its gains for the second successive day, trading around $89.50 per barrel during the Asian hours on Wednesday. Crude oil climbed as persistent risks to Middle East energy flows overshadowed signs of rising supply from the region.
placeholder
Gold falls to a two-month low as real yields bite — can $4,000 hold?Gold hit a two-month low on 7 October, with spot touching roughly $4,090 and COMEX December futures closing at $4,140.70, even as the New York Fed's one-year inflation expectation rose to 3.9% — its highest since May 2023. The paradox resolves through real yields: the 30-year Treasury yield reached 5.732% intraday, its highest since 2002. Here are the levels, the institutional split, and the scenarios into tonight's jobless claims and 30-year auction.
Author  Irene Q.
22 hours ago
Gold hit a two-month low on 7 October, with spot touching roughly $4,090 and COMEX December futures closing at $4,140.70, even as the New York Fed's one-year inflation expectation rose to 3.9% — its highest since May 2023. The paradox resolves through real yields: the 30-year Treasury yield reached 5.732% intraday, its highest since 2002. Here are the levels, the institutional split, and the scenarios into tonight's jobless claims and 30-year auction.
Related Instrument
goTop
quote