Gold slips as risk appetite caps gains despite dovish Fed outlook and soft USD demand

Gold (XAU/USD) comes under renewed selling pressure for a second consecutive day, dropping to a more than one-week low near the $4,858 region ahead of Tuesday’s European session. The metal later rebounds toward $4,900 as traders hold back from aggressive positions and wait for clearer signals about the US Federal Reserve’s rate-cut outlook.

Market attention now shifts to Wednesday’s FOMC meeting minutes. In addition, the US Personal Consumption Expenditure (PCE) Price Index scheduled for Friday is expected to influence short-term US Dollar (USD) direction, which could drive fresh movement in the non-yielding metal later in the week. For now, the USD continues to struggle to attract demand amid expectations of a softer policy stance from the Fed.

Investors are increasingly betting the US central bank could begin lowering borrowing costs in June and may deliver more than two rate cuts this year. These expectations are keeping the USD subdued and offering some underlying support to Gold. Meanwhile, uncertainty ahead of the next round of US-Iran nuclear discussions is also lending mild safe-haven demand to the precious metal.

Still, a broadly positive tone in global equity markets is limiting stronger buying interest in Gold. Traders will also monitor the Empire State Manufacturing Index and comments from Federal Reserve officials for short-term direction. With mixed fundamental signals, caution remains necessary before taking strong positions in XAU/USD.

Technical outlook: bias leans lower

Gold’s inability to sustain gains above the downward-sloping 100-hour Simple Moving Average (SMA), followed by renewed selling, keeps sellers in control. The Moving Average Convergence Divergence (MACD) remains below both its signal line and the zero level, although the shrinking negative histogram suggests selling pressure is easing. Meanwhile, the Relative Strength Index (RSI) stands near 40.7, pointing to a neutral-to-bearish tone but showing early signs of stabilization.

As long as price stays below the 100-hour SMA, downside risks remain dominant. A clear move back above this level would be required to improve sentiment, especially if accompanied by a stronger MACD crossover and an RSI rise above 50. Until then, recoveries are likely to face resistance and the broader outlook continues to favor tests of lower support levels.