Gold Price Forecast | XAUUSD Eyes New Highs

Over the past 12 months, the XAUUSD has surged by 25%, a significant achievement given the Fed's tightening policies, prolonged higher interest rates, the dominance of the US dollar in the Forex market, and rising Treasury yields. As positive economic conditions emerge, it’s an opportune moment to consider new all-time highs for gold.

Factors Favoring Gold's Uptrend

Fed's Dovish Turn and Economic Reports

A series of disappointing reports on the US economy has prompted FOMC officials to adopt a dovish stance. Consequently, the futures market now sees a 100% likelihood of a rate cut in September, up from 73%. Moreover, derivatives indicate a 60% confidence in a third round of monetary easing before year-end, pushing Treasury yields lower and creating a favorable environment for gold.

Impact of US Treasury Yields and Political Risks

Gold is outperforming US Treasuries, which are currently under pressure due to potential risks associated with a Donald Trump victory in November. Trump's policies, which are seen as pro-inflationary, increase the likelihood of a scenario similar to 2016 when the 10-year bond yield rose from 1.85% at the time of the election to 2.6% by year-end.

Safe-Haven Status and Speculative Interest

Gold's reaction to political events, such as the assassination attempt on Donald Trump, underscores its status as a safe-haven asset. Speculators continue to build up long positions, pushing the XAUUSD closer to new all-time highs. Additionally, the dovish rhetoric from FOMC members and the likelihood of Fed tapering are driving capital into gold-linked ETFs.

Strategic Trading Outlook

Established Long Trades and Future Targets

The previously set long trades on gold at $2400 and $2425 per ounce have been successfully achieved. The next target range is between $2480 and $2525. In this context, it is advisable to keep existing long trades open or initiate new ones if you haven't already. For scalping, trades can be executed above $2470 and below $2464.

Summary

Gold has experienced a remarkable 25% increase over the past year despite various economic challenges. As the Fed shifts to a more dovish stance and political uncertainties loom, gold's safe-haven appeal and speculative interest continue to drive its price upward. With targets set at $2480 to $2525, traders are advised to maintain their long positions or consider new ones, while also looking for scalp opportunities around key levels.