Gold price forecast (XAU/USD) gains traction during the European session, extending its recovery from the $3,000 psychological level. The US Dollar (USD) weakens at the start of the week, stalling its three-day rebound from a multi-month low as markets anticipate the Federal Reserve (Fed) will resume rate cuts soon. This USD softness acts as a tailwind for the non-yielding yellow metal, providing bullish momentum.
Key Points
- Gold price edges higher amid USD weakness and rate-cut expectations.
- Risk appetite improves as US President Donald Trump’s tariff plans appear less stringent.
- Market focus shifts to US PMIs and speeches from key Federal Open Market Committee (FOMC) members.
Market Context
Gold price forecast draws support from renewed USD selling pressure, as reports indicate that US President Donald Trump is revising his reciprocal tariff strategy to be more targeted and less severe. This shift in policy boosts investor confidence in riskier assets, thereby reducing gold’s safe-haven appeal.
Meanwhile, diplomatic efforts continue between the US, Ukraine, and Russia, with peace negotiations in progress. The recent 30-day ceasefire agreement between US President Trump and Russian President Vladimir Putin brings hope for stability in the region. However, any escalation could quickly renew gold’s appeal as a safe-haven asset.
The US Dollar remains steady after reaching a one-and-a-half-week high on Friday, following the Fed’s less dovish stance. The central bank reaffirmed its plan for two 25-basis-point rate cuts by year-end. However, Fed Chair Jerome Powell recently indicated that trade tariffs might slow economic growth, keeping rate-cut expectations intact. This scenario limits the USD’s upside potential, which in turn supports gold prices.
Technical Insights
From a technical perspective, gold price maintains support above the $3,000 level. This psychological threshold acts as a critical pivot, and a decisive break below it could trigger further declines toward the $2,982-$2,978 range. If selling pressure extends, the next downside target would be the $2,956-$2,954 zone, a former resistance now turned support.
On the upside, gold faces immediate resistance near its all-time high of $3,057-$3,058. The daily Relative Strength Index (RSI) suggests that gold has eased from overbought levels, indicating room for further bullish momentum if buyers return. A strong move above this resistance zone could reinforce the broader uptrend observed over the past three months.
Global Market Movers
- Middle East Tensions: Israel intensifies strikes in Gaza, targeting key Hamas leaders. Simultaneously, Iran-backed Houthi forces launch missile attacks on Israel, escalating regional conflict.
- US-Yemen Conflict: The US military conducts fresh airstrikes in Yemen, targeting Houthi-controlled areas. Meanwhile, Houthi militants claim to have attacked an aircraft carrier in the Red Sea and Israel’s Ben Gurion Airport.
- Upcoming Data Releases: Investors await US PMIs, which will provide insights into global economic health. The key focus, however, remains on Friday’s US Personal Consumption and Expenditure (PCE) Price Index.
Gold Price Outlook
Gold price remains poised for further gains as long as it holds above the critical $3,000 support level. Any dips toward this zone are likely to attract fresh buying interest. A sustained break above $3,058 could open the door for further upside potential, reinforcing the long-term bullish trend.
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