Gold (XAU/USD) Holds Gains Near $3,347 as Fed Uncertainty Fuels Bullish Setup

Gold (XAU/USD) Tests Support as Fed Risk, Geopolitics, and Yield Pressure Trigger Volatile Repricing

XAU/USD Holds Near $3,327 as Dollar Weakens on Fed Rift

Gold (XAU/USD) climbed for a second day to $3,327.10 on Wednesday’s close and opened Thursday at $3,347.50—up 0.6% intraday but still 1.1% lower week-on-week. The yellow metal's rebound reflects deepening concerns over the Federal Reserve's independence. U.S. President Donald Trump’s threat to replace Fed Chair Jerome Powell has reawakened fears that monetary policy may become politically compromised, pushing the U.S. dollar to a 3-year low. This breakdown in confidence continues to favor non-yielding safe-haven assets like gold.

Fed Cut Bets Accelerate, Lifting Bullion Even as Israel-Iran Tensions Ease

Traders are now pricing in a 50-basis-point rate cut by year-end, with odds rising for the first move as early as July. The dovish momentum is further amplified by Jerome Powell’s own hesitance to ease policy under tariff-fueled inflation uncertainty. But investors are front-running easing anyway, especially with Friday’s PCE inflation data likely to show further disinflation. The result: treasury yields fall, gold rises. Still, the recent ceasefire between Israel and Iran has tempered the upside, as global risk sentiment improves. Despite this, the fragility of that truce and the planned U.S.–Iran nuclear talks keep a geopolitical floor under XAU/USD.

Technical Setup: Gold Fails to Break Resistance, Range Dominates

Technically, gold remains in a consolidation band between $3,200 and $3,500. A failed breakout above $3,368–$3,370, now acting as resistance, has kept upside momentum in check. Below, the $3,295 mark provides immediate support. The 50-day EMA continues to offer dynamic support, with the 200-day EMA nearing $3,000, creating a dense support zone if selling intensifies. If XAU/USD breaks below $3,295, downside targets include $3,245 and $3,200, while a bullish breakout above $3,400 could open the door to $3,434, $3,451, and the psychological $3,500 mark. Above that, a measured move implies potential toward $3,800.

Yearly Performance and Futures Positioning Show Underlying Strength

From a macro perspective, gold is still up a staggering 45.1% YoY, with the June 26, 2024 open at $2,307.90 compared to Thursday’s $3,347.50. Gold futures (GC=F) have retreated modestly from the mid-June highs but remain in a bullish long-term trend. The metal is consolidating gains after a run that tested record levels. A dip from the June 18 open of $3,385.30 reflects rotation into equities, as S&P 500 futures (ES=F) rose 3.4% this week, potentially pulling flows from gold.

Gold's Role as Inflation Hedge Back in Focus Ahead of PCE Data

As economic data softens, gold’s position as a hedge against both inflation and financial instability is regaining attention. Friday’s U.S. PCE data will be pivotal. A weaker print could intensify dollar selling and enhance gold’s relative appeal. Markets are also digesting Powell’s testimony that new tariffs could trigger inflation, but that without them, the Fed would be easing more aggressively. This nuance reinforces gold’s role in portfolios hedging policy risk.

Insider Accumulation and Central Bank Demand Shape Long-Term View

Notably, central banks remain strong gold buyers. While not explicitly disclosed this week, ongoing accumulation by sovereign entities remains a backbone of the bullish thesis. On the private side, investor sentiment remains intact despite temporary pullbacks. Retail and institutional traders continue to rotate into metals amid stretched equity valuations. The $8M presale of gold-linked tokens suggests a retail hunger for levered exposure to the next breakout.

Gold Price Forecast: Risk, Yield, and Policy Drive Direction

With volatility high, the gold market is pricing in uncertainty rather than conviction. A break above $3,400 will need confirmation from weaker U.S. macro data and declining core PCE. Until then, the $3,295–$3,370 range could hold. That said, Fed chaos, geopolitical unpredictability, and disinflation are unlikely to resolve cleanly—giving XAU/USD a long-term bullish tilt. With $3,500 still acting as the major psychological ceiling, a Q3 move toward $3,700–$3,800 remains on the table.

Verdict: Gold (XAU/USD) is a Buy on Dips Above $3,295 with Eyes on $3,500–$3,800 Breakout if Fed Cuts and Geopolitics Align.

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