Gold prices soared past the $3,510 per ounce milestone, marking a fresh all-time high during Tuesday’s Asian session. The surge came on the back of growing expectations that the US Federal Reserve (Fed) will deliver multiple rate cuts in the coming months. However, the precious metal now faces critical tests as momentum cools and the US Dollar stages a modest recovery.
Technical Overview: Gold Faces Resistance at $3,500 Zone
The rally above $3,510 pushed gold into heavily overbought territory across multiple timeframes.
- On the 4-hour chart, the Relative Strength Index (RSI) remains near 70, signaling potential short-term correction.
- Immediate support levels are seen at $3,470, followed by $3,450 (July 16 peak) and $3,435 (July 23 high / Monday’s low).
- To the upside, the $3,500 psychological mark is acting as the key battleground. A clean daily close above this zone could unlock targets at $3,530, with the next Fibonacci cluster around $3,565–3,570.
Despite overbought conditions, buyers continue to defend higher levels, indicating that any near-term pullback may be shallow and short-lived.
Dollar Recovery and Yields Challenge Gold’s Momentum
The US Dollar Index (DXY) climbed nearly 0.7% on the day, erasing five sessions of losses. A recovery in US Treasury yields has also weighed on non-yielding assets like gold.
Markets now await the US Manufacturing PMI, which could provide fresh cues on growth momentum. Stronger data may give the dollar further strength, keeping gold under pressure in the short run.
Fundamental Drivers: Fed Independence and Geopolitics Support Gold
While profit-taking and a firmer dollar weighed on intraday sentiment, gold remains supported by deep-rooted fundamental themes:
- Fed Independence Concerns: President Trump’s dismissal of Fed Governor Lisa Cook over mortgage fraud allegations has sparked worries about central bank autonomy. Trump has also criticized Fed Chair Jerome Powell for not cutting rates sooner. These tensions add to safe-haven demand for gold.
- Tariff and Legal Uncertainty: A US federal appeals court recently ruled Trump’s reciprocal tariffs illegal, with the case now heading to the Supreme Court. Trade policy uncertainty underpins gold’s safe-haven appeal.
- Geopolitical Tensions: Escalating conflict in Russia–Ukraine and renewed violence in the Middle East continue to provide strong tailwinds for bullion.
Upcoming US Data: A Critical Test for Gold’s Rally
This week’s US economic calendar is loaded with high-impact events that could dictate gold’s next move:
- Tuesday: ISM Manufacturing PMI
- Wednesday: JOLTS Job Openings
- Thursday: ADP Employment Report & ISM Services PMI
- Friday: Nonfarm Payrolls (NFP)
These reports will shape expectations for the September Fed meeting, where markets currently price in an 87% chance of a 25bps rate cut, according to the CME FedWatch tool.
Outlook: Consolidation Likely Before Next Surge
While gold has decisively broken into record territory, the failure to hold above $3,500 on a closing basis could lead to consolidation. Traders should watch $3,470–3,450 for immediate support, with deeper protection at $3,410–3,400.
If gold sustains momentum above $3,500, the next upside objectives lie at $3,565–3,570, with a medium-term target at $3,600 and beyond.
✅ Key Takeaway: Gold’s breakout above $3,510 highlights strong bullish momentum driven by Fed rate cut bets, political risks, and safe-haven flows. However, short-term overbought signals suggest consolidation before the next leg higher.
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