Gold (XAU/USD) found renewed buying interest during Thursday’s Asian session, recovering slightly from the sharp decline seen after the Federal Reserve’s hawkish stance pushed it to a one-month low. The yellow metal is supported by a pause in the US Dollar’s (USD) rally, following its rise to a two-month high.
The rebound comes as traders digest the Fed’s decision and shift focus to upcoming US inflation data, particularly the Personal Consumption Expenditures (PCE) Price Index. Meanwhile, the cautious tone across markets continues to support safe-haven assets like gold. However, with reduced expectations of an immediate rate cut, upside potential for gold may remain limited in the near term.
Key Market Drivers:
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Fed Stands Firm:
The Federal Reserve held interest rates steady for the fifth straight meeting, keeping the target range at 4.25%–4.50%. Notably, Fed Governors Michelle Bowman and Christopher Waller dissented—marking the first such disagreement since 1993. -
Powell’s Hawkish Stance:
Fed Chair Jerome Powell confirmed no decision has been made about a rate cut in September, reinforcing the Fed’s cautious approach. This commentary, coupled with positive US economic data, supported the US Dollar and pressured gold prices on Wednesday. -
Strong US Data:
ADP reported that US private-sector employment rose by 104,000 in July, bouncing back from a revised 23,000-job loss in June. Additionally, the US GDP grew at an annualized rate of 3.0% in Q2, following a 0.5% contraction in the prior quarter, according to the Commerce Department’s advance estimate. -
Market Outlook:
Investors now await the core PCE Price Index for fresh direction. In the meantime, USD strength has cooled slightly, allowing gold to attract buyers. However, analysts suggest caution before confirming a bullish reversal in XAU/USD.
Technical Analysis:
Gold is currently finding support above the 100-day Simple Moving Average (SMA), halting the recent downward momentum triggered by the FOMC outcome. Yet, technical indicators on the daily chart are beginning to tilt bearish, suggesting that any rebound above $3,300 could be short-lived.
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Immediate Resistance:
The $3,309–$3,310 zone may act as a near-term ceiling. A break above this level could trigger short-covering and extend gains toward the $3,325–$3,326 resistance area. -
Key Support Levels:
On the downside, the $3,275–$3,270 region—aligned with the 100-day SMA—remains a crucial support. A decisive break below this could lead to a retest of June’s swing low around $3,248–$3,247. Breaching that zone may open the door for a deeper drop toward the $3,200 mark.
