Gold Price Forecast: XAU/USD on its route to retest record highs at $2,450

XAU/USD Current price: $2,426.35

• Markets turned optimistic amid fresh bets Donald Trump could win the US presidential election.
• Federal Reserve Chairman Jerome Powell delivered comments with a dovish tilt.
• XAU/USD bullish case gains strength, aims to retest its record high at $2,450.

Gold price extends gains above the $2.400 mark, approaching its all-time high of $2,449.92. XAU/USD shed some ground at the beginning of the day amid resurgent US Dollar demand on the back of weekend news. Former President and current Republican candidate Donald Trump suffered an assassination attempt while on campaign in Pennsylvania, a headline that initially spurred risk-aversion.

However, the Greenback quickly lost ground as investors lifted bets that Trump could win the upcoming presidential election and loosen the fiscal policy. Meanwhile, Moody’s Credit Rating Agency said the Federal Reserve (Fed) could begin easing the monetary policy as soon as this month, as the central bank is scheduled to meet on July 30-31. Furthermore, analysts at Moody’s expect the   Fed Funds Rate to be reduced by 50-75 bp in 2024 and another 100-125 bp through 2025. As a result, stock markets rallied, and Wall Street hit record highs.

Fed Chairman Jerome Powell spoke at the Economic Club of Washington DC and said that if the Fed waits for inflation to get to 2% to cut, it has waited too long, further fueling optimism. He also welcomed easing inflationary pressures in the second quarter of the year and added that an unexpected weakening in the labor market would merit a reaction from policymakers. Powell’s dovish tilt halted the stocks´ rally and helped the USD recover some modest ground.

XAU/USD short-term technical outlook  

From a technical point of view, XAU/USD retreats from intraday highs mid-American afternoon, but the daily chart shows the bullish case is alive and kicking. The pair is rallying far above bullish moving averages as technical indicators picked up upward momentum, approaching overbought readings and without signs of giving up.

In the near term, and according to the 4-hour chart, XAU/USD may struggle to extend gains. Technical indicators are retreating from overbought readings with uneven strength, still far from suggesting an upcoming slide. Nevertheless, the pair is developing above a bullish 20 Simple Moving Average (SMA) currently at around $2,403, while the longer moving averages slowly gain upward traction, but are far below the shorter one to become relevant.

 Support levels: 2,418.10 2,403.00 2,391.20

Resistance levels: 2,439.60 2,450.00 2,465.00