Gold Price Forecast: XAU/USD bullish support remains resolute this year – MUFG

Gold has risen above $2,200 for the first time on a dovish Fed. Economists at MUFG Bank analyze the yellow metal’s outlook.

Short-term moves will remain tied to data potentially influencing Fed decision-making

Gold has leaped above $2,200 for the first time after the Fed maintained its outlook for three cuts this year, suggesting it is not alarmed by a recent uptick in inflation. 

The FOMC left the target range for the federal funds rate unchanged at its March meeting. The median dot in the Summary of Economic Projections continued to show 75 bps of cuts in 2024. The median dots for 2025 and 2026 were each revised 25 bps higher, to 3.875% and 3.125%, respectively. The median dot for 2026 remained modestly above the median longer run dot, which edged up to 2.6%. 

We continue to believe that the short-term moves will remain tied to data potentially influencing Fed decision-making while downside to the price will be limited by robust support from the other two channels (supportive central bank demand and bullion’s role as the geopolitical hedge of last resort).