The gold price (XAU/USD) continues its downward trend, hitting a three-week low near $2,850 during the European session. This marks the third decline in four days, driven by a stronger US Dollar and hawkish Federal Reserve expectations. Investors are closely watching the upcoming US Personal Consumption Expenditure (PCE) Price Index, which could influence the Fed’s interest rate decisions and gold’s near-term trajectory.
Key Points
- Gold prices have fallen to a three-week low near $2,850 amid a stronger US Dollar.
- The Federal Reserve’s hawkish stance and elevated inflation are weighing on the non-yielding metal.
- The US PCE Price Index, a key inflation metric, will impact the Fed’s rate outlook and gold prices.
- Technical analysis suggests further downside potential for gold if key support levels are breached.
Gold Price Detailed Analysis
Market Context: Why is Gold Falling?
The gold price is under pressure due to a combination of factors, including a recovering US Dollar and expectations of sustained high interest rates. Recent data shows US inflation remains elevated, supporting the Fed’s decision to maintain its restrictive monetary policy. This has boosted the Dollar, making gold more expensive for international buyers.
Additionally, concerns about US President Donald Trump’s tariff plans and geopolitical tensions have failed to provide the usual safe-haven support for gold. Instead, investors are repositioning ahead of the US PCE data, which could offer clues about future Fed actions.
Technical Insights: What’s Next for Gold Price?
From a technical perspective, gold has broken below the 23.6% Fibonacci retracement level of its December-February rally. This suggests further downside potential, with key support levels at 2,834 and 2,834 and 2,810. A decisive break below $2,800 could signal a deeper correction.
On the upside, resistance is seen near 2,885and2,885and2,900. A sustained move above these levels could reignite bullish momentum, targeting the all-time high near $2,956.
Expert Opinions
Kansas City Fed President Jeff Schmid emphasized the need to remain vigilant on inflation, while Cleveland Fed President Beth Hammack noted that rates are likely to stay on hold. Philadelphia Fed President Patrick Harker highlighted slowing progress toward the 2% inflation target, reinforcing the Fed’s cautious stance.
Conclusion
The gold price remains vulnerable to further losses as the US Dollar strengthens and the Fed maintains its hawkish stance. The upcoming US PCE data will be critical in shaping market expectations and gold’s near-term direction. Investors should monitor key technical levels and economic indicators for trading opportunities.
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