Gold Price Forecast: XAU/USD hits 5-month high, falls to $1,980 on safe haven flows, USD weakness

• The price of Gold hit a five-month high of $1,997.16 per troy ounce after recovering from daily lows of $1,972.12.
• The escalation of the conflict in the Middle East and the attacks on US military bases in Iraq and Syria increase investor anxiety.
• Fed Chairman Jerome Powell’s dovish comments sparked Gold’s rally on Friday.

The price of Gold was on the verge of testing the $2,000 per troy ounce barrier on Friday amid rising geopolitical risks, as the conflict between Israel and Hamas is rapidly spreading to more countries in the region. At the time of writing, the XAU/USD pair is trading around $1,980.20, after the yellow metal rebounded from daily lows of $1,972.12.

XAU/USD rises, driven by Middle East conflicts and weakening US Dollar

The escalation of the conflict in the Middle East keeps investors in suspense, since, as reported by Bloomberg, “the US said that its military bases in Iraq and Syria are increasingly being attacked,” to which we must add that the region’s leaders will meet in Cairo for a summit.

That and the dovish comments from Federal Reserve (Fed) Chairman Jerome Powell weighed on US Treasury bonds, particularly the benchmark 10-year bond, which fell seven basis points to 4.929%, a wind of queue for XAU/USD prices. The US Dollar Index (DXY), which tracks the dollar against a basket of six currencies, has pared its earlier gains to settle at 106.17, down 0.07%.

The Fed parade continued on Friday, as Atlanta Fed President Raphael Bostic has indicated the possibility of a rate cut in 2024, suggesting a possible shift in monetary policy if economic conditions warrant it. . For her part, Cleveland Fed President Loretta Mester has expressed that the Federal Reserve could be at or near the peak of its rate hike cycle. She emphasized that the central bank will rely closely on incoming data in its decision-making process for the next monetary policy meeting.

Apart from this, next week’s economic calendar will include preliminary US PMI data, release of preliminary third quarter Gross Domestic Product (GDP) reading, durable goods orders, subsidy claims unemployment and the Fed’s preferred inflation indicator, the core PCE.

XAU/USD Price Analysis: Technical Outlook

If the gold price extends its gains beyond $2000, gold’s next resistance is seen at the May 10 daily high of $2,048.15, followed by last year’s high of $2,075.14, before challenging the all-time high (ATH) at $2,081.82. If