Gold Price Forecast: Bullion Breaks Out of Bull Flag Formation

Gold Price Outlook: XAU/USD

The price of gold extends the rebound from the weekly low ($2603) as there appears to be a growing dissent within the Federal Reserve, and bullion may retrace the decline from the monthly high ($2673) as it seems to be breaking out of a bull-flag formation.

Gold Price Forecast: Bullion Breaks Out of Bull Flag Formation

The price of gold initiates a series of higher highs and lows as Atlanta Fed President Raphael Bostic, who votes on the Federal Open Market Committee (FOMC) in 2024, insists that ‘I’m open to not moving at one of the last two meetings if the data comes in as I expect’ during an interview with the Wall Street Journal.

In light of the recent data prints coming out of the US, Bostic warns that ‘this choppiness to me is along the lines of maybe we should take a pause in November,’ with the official going onto say that ‘I think we have the ability to be patient and wait and let things play out a little longer.’

As a result, the FOMC may move to the sidelines after delivering a 50bp rate cut in September, but signs of a slowing economy may keep the Fed on track to further unwind its restrictive policy amid the progress in bringing down inflation towards the 2% target.

With that said, the threat of a policy error may keep the price of gold afloat as it continues to serve as an alternative to fiat currencies, and bullion may continue to reflect a bullish trend as it appears to be tracking the positive slope in the 50-Day SMA ($2546).

XAU/USD Price Chart – Daily

Chart Prepared by David Song, Strategist; XAU/USD on TradingView

The price of gold appears to be breaking out of a bull-flag formation as it bounces back ahead of the 50-Day SMA ($2546), and bullion may continue to track the positive slope in the moving average as it holds above the indicator.
A breach above the monthly high ($2673) brings the September high ($2686) on the radar, with the next area of interest coming in around $2730 (100% Fibonacci extension).
Will keep a close eye on the Relative Strength Index (RSI) as it moves back towards overbought territory, but the oscillator may show the bullish momentum abating if it holds below 70 despite a further advance in the price of gold.

Additional Market Outlooks

USD/CAD Rally Pushes RSI Up Against Overbought Zone

Australian Dollar Forecast: AUD/USD Bearish Price Series Persists

USD/JPY Defends Post-NFP Reaction with CPI Report in Focus

NZD/USD on Cusp of Testing September Low Ahead of RBNZ Rate Decision

--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong

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