Gold (XAU) Daily Forecast: Surging Towards $2,400; Is a Rebound Next?

Meanwhile, generally positive sentiment in global equity markets continues to cap gold’s price increase.

Fed Rate Cuts and Geopolitical Risks Weaken US Dollar, Boost Gold Prices

The US dollar is under pressure as markets anticipate Federal Reserve interest rate cuts due to recession concerns. The Fed is expected to lower borrowing costs at the September meeting, with a near-certain rate cut and a 70% probability of a 50-basis-point reduction.

Additionally, US data showed a 2.5% drop in the trade deficit in June, driven by a 1.5% increase in exports of aircraft and oil and gas.

These factors are likely to keep US bond yields and the USD subdued. Meanwhile, geopolitical risks in the Middle East could support XAU/USD, making gold more attractive as a safe-haven asset.

Middle East Tensions and Fed Cuts Boost XAU/USD Gold Prices

Tensions in the Middle East have intensified as Hezbollah launched drone and rocket attacks on Israel on Tuesday, retaliating for the reported killings of a top Hezbollah commander and a Hamas leader by Israel last week.

This conflict adds to geopolitical risks, which, combined with expectations of US Federal Reserve interest rate cuts due to recession fears, may support gold prices (XAU/USD).