Gold Bulls Defy as Fed Rate Cut Speculations and Safe-Haven Demand Fuel XAU/USD
Gold remains to demonstrate strength as bullish mood continues to dominate, buoyed by hopes of Federal Reserve rate cuts and revived safe-haven demand. The yellow metal recovered its lost ground after a slight decline from an all-time high, supported by softer-than-anticipated US employment data, ongoing geopolitical tensions, and political uncertainties in France and Japan. Even as a small recovery in the US Dollar and overall positive risk sentiment might limit advances, gold is well-placed close to all-time highs as market participants await fresh cues from the next US Producer Price Index (PPI) and Consumer Price Index (CPI) releases. KEY LOOKOUTS • Market participants will look closely at the next US Producer Price Index (PPI) and Consumer Price Index (CPI) releases, which might dictate the next direction for gold prices. • Expectations of possible Federal Reserve interest rate reductions continue to underpin safe-haven demand for gold. • Escalating Middle East tensions, Russia-Ukraine hostilities, and political unrest in France and Japan could support the safe-haven appeal of gold. • Any US Dollar rebound or favorable risk mood in international markets can be a headwind, capping risky advances in gold. Gold continues on an upward slope as bulls maintain the upper hand, helped by hopes of Federal Reserve rate cuts and increased safe-haven demand in the face of global uncertainties. Soft US jobs data, coupled with political turmoil in France and Japan and increasing geopolitical tensions, have driven gold’s allure as a safe-haven asset. Although modest US Dollar gains and overall good risk mood might abate sharp buying, the market is concentrating on future US inflation figures, which are set to determine the short-term direction of the XAU/USD cross. Gold remains close to historic highs on back of Fed rate cut hopes and safe-haven buying against geopolitical and political risks. US PPI and CPI data will guide the next move. Cautious USD advances and favorable risk appetite can limit further rallies. • Gold (XAU/USD) regained its lost steam after a brief dip from an historic high. • Fed rate cut hopes underpin positive sentiments in gold. • Subpar US jobs numbers made the argument for more stimulus through monetary policy even more compelling. • Geopolitical tensions, such as the Israel-Hamas war and Russia-Ukraine, enhance gold’s safe-haven demand. • Political unrest in France and Japan contributes to uncertainty in markets, which is bullish for gold. • US PPI and CPI reports due out shortly are significant events that can help determine gold’s near-term trajectory. • Technical resistance at $3,640–$3,645, and the record high close to $3,675 that serves as a strong resistance. Gold remains in focus among investors as sentiment remains bullish, fueled by hopes of Federal Reserve rate reductions and fresh safe-haven demand. Downbeat US employment data has supported the perception of a weakening jobs market, leading markets to price in future policy loosening. Geopolitical risks, including the Israel-Hamas clashes and the evolution of the Russia-Ukraine standoff, and political uncertainties in France and Japan have also fueled gold’s appeal as an insurance asset. XAU/USD DAILY CHART PRICE SOURCE: TradingView In spite of an overall favorable risk climate and modest US Dollar recovery, gold is strongly supported at near-record levels. Market players are looking closely toward soon-to-be-released US inflation reports, including the Producer Price Index (PPI) and Consumer Price Index (CPI), to offer new guidance to the XAU/USD pair. The blend of macroeconomic variables, geopolitical uncertainty, and policy anticipation continues to support gold as a premier safe-haven asset. TECHNICAL ANALYSIS Gold is in a bullish trend but encounters some short-term resistance. The daily Relative Strength Index (RSI) is overbought, indicating that a short-term pullback or consolidation may take place before more upside. The principal support levels are at $3,600 and $3,580, whereas short-term resistance is at the $3,640–$3,645 level. A breach above the last all-time high at around $3,675 would set the stage for the $3,700 level round number, but bulls should be reluctant amid the overbought level. FORECAST Gold can be expected to move higher over the short term if positive drivers like Fed rate cut hopes, global tensions, and safe-haven appetite are in place. A continuous breakout above $3,675 previous record high can drive the XAU/USD currency pair towards $3,700, inviting follow-through purchases from bearish traders. Good risk appetite or sustained US Dollar weakness can further add to the upside momentum. On the negative side, any more-than-anticipated US inflation numbers or sudden US Dollar rebound could put a lid on gains and set the stage for a corrective reversal. Levels of support to pay particular attention to lie in the zones of $3,600 and $3,580, while a more severe decline has its sights on the $3,565–$3,560 region. Care is advised, since overbought technicals indicate little short-term scope for aggressive bullish wagers.