Gold Fails to Hold Above $3,500 on Fed Rate Cut Expectations and Geopolitics
Gold continued its streak of gains to a new record high of more than $3,500 on rising bets of a September rate cut by the Fed, ongoing safe-haven demand, and escalating geopolitical tensions. The metal, however, could not find firm acceptance above the important psychological level due to a limited U.S. Dollar recovery and overbought levels dampening upside momentum. Investors now shift their attention to future U.S. macroeconomic statistics, such as the ISM PMI, JOLTS, and Friday’s pivotal Nonfarm Payrolls report, for new indications on the Fed policy trail and the next gold directional bias. KEY LOOKOUTS • Ongoing market optimism on a September rate cut continues to drive solid buying demand for gold. • Gold finds it hard to gain acceptance above the $3,500 psychological level, with overbought indicators calling for caution. • Russia-Ukraine tensions, Middle East hostilities, and U.S. tariff wars are fueling safe-haven demand. • ISM PMI, JOLTS, ADP jobs report, and Nonfarm Payrolls are some economic indicators that might prescribe the next directional move in gold. Gold is still riding an extremely bullish wave, with expectations of a Fed rate cut in September and ongoing safe-haven flows in the face of global uncertainties. The precious metal briefly touched a record peak above $3,500 but struggled to sustain gains at this psychological level as a modest U.S. Dollar rebound and overbought technical conditions capped further upside. Meanwhile, geopolitical risks and U.S. tariff disputes remain in focus, keeping demand for gold intact. Investors now await key U.S. economic data releases this week for fresh direction, with particular attention on Friday’s Nonfarm Payrolls report. Gold reached a new record of over $3,500, boosted by bets on Fed rate cuts and safe-haven demand, but was unable to hold gains at the critical level. Future U.S. economic indicators, such as the Nonfarm Payrolls report, will probably decide its future direction. • Gold set a new all-time high at over $3,500 in the Asian session. • Increasing hopes of a September Fed rate cut continue to propel demand. • Safe-haven flows are robust in the face of geopolitical tensions and tariff wars. • The U.S. Dollar’s weak pullback put an end to gold’s upside momentum. • Overbought technical levels warn of caution ahead of further uplift. • Important U.S. economic data releases this week, including NFP, will dictate the next direction. • Support is near $3,440, and resistance is at the $3,500 psychological level. Gold continues to be in the limelight as investors increasingly factor in the possibility of a Federal Reserve cut in interest rates this September, keeping the non-yielding asset in demand. The safe-haven demand for gold has also been strengthened by increased geopolitical tensions, such as rising tensions in Eastern Europe and the Middle East, and continued uncertainty regarding U.S. tariffs. All these have combined to provide a bullish climate for bullion, with market players looking for stability in the face of economic and political instability. XAU/USD DAILY PRICE CHART SOURCE: TradingView Adding to the trend, fears over the Federal Reserve’s independence have joined the fray following recent political meddling and attacks on its leadership. This has further agitated investors, who have gone out looking for refuge in gold. Meanwhile, focus now turns to a string of high-impact U.S. economic data releases due to come out over the next week or so, which should give us more insight into the Fed’s policy direction. In the meantime, gold should continue to hold strong attraction as an investment hedge and as a gauge of generalized market uncertainty. TECHNICAL ANALYSIS Gold’s recent break above the $3,440 resistance level put an end to its multi-month consolidation and indicated very bullish strength. But the metal has not been able to maintain firmly above the $3,500 psychological handle, indicating that bulls are getting nervous at higher prices. The daily Relative Strength Index (RSI) is flashing overbought, signaling the likely probability of a short-term pullback or consolidation before advancing the next leg higher. On the flip side, near-term support rests at $3,475–$3,474, with the $3,440 pivot zone in tow, which should see fresh buying interest if touched. FORECAST If bullish momentum strengthens again, gold may decisively break above the $3,500 psychological level and set the stage for additional gains. Ongoing safe-haven flows in the face of ongoing geopolitical tensions, combined with increasing confidence in a September Fed rate cut, would offer robust tailwinds to buyers. A persistent break above this point may have gold tracing new record highs, as investors want shelter from uncertainty in global politics and monetary policy alike. Conversely, inability to find acceptance at prices above $3,500 might prompt some profit-taking and a corrective pullback. Short-term overbought levels, along with some modest U.S. Dollar improvement, might bear down on prices. Under such circumstances, gold could retest the $3,475–$3,474 level, while a further slide could find support near $3,440. A firm breach through this level could attract more selling pressure and drive the metal towards the $3,410–$3,400 area.
