Gold (XAU/USD) pulled back from a three-day high near $3,375 on Thursday as optimism over an extended US–China trade truce and the upcoming US–Russia summit dampened safe-haven demand. However, rising expectations for Federal Reserve rate cuts and a softer US dollar continue to provide underlying support, suggesting that any dips could attract buyers.
Market Sentiment and Fed Expectations Support Gold
The US dollar remains under pressure amid growing market confidence that the Fed will lower interest rates in September, with traders also pricing in the possibility of a second cut before year-end. According to CME’s FedWatch Tool, a 25-bps cut next month is almost fully priced in, supported by July’s in-line inflation data and signs of labor market weakness from the latest Nonfarm Payrolls report.
High-level comments from Fed officials reflect a mix of caution and concern — with some pointing to lingering inflation risks while others acknowledge the slowdown in employment. Meanwhile, US Treasury yields remain subdued ahead of the US Producer Price Index (PPI) release later today.
Gold Technical Outlook
Key Resistance Levels:
- Immediate resistance is near $3,375, followed by the $3,400 round number.
- A break above $3,410 could target $3,422–$3,423, and potentially $3,435.
- Sustained bullish momentum could pave the way for a retest of the all-time high near $3,500.
Key Support Levels:
- Initial support lies near $3,358–$3,360 and the $3,331 zone.
- A drop below $3,300 could shift sentiment bearish, opening the door toward deeper declines.
Technical Bias:
Gold’s breakout above $3,358–$3,360 and its hold above the 200-period SMA on the 4-hour chart favor a bullish bias, though oscillators show mixed momentum. Traders may wait for a clear follow-through before entering aggressive long positions.
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