Gold (XAU/USD) traded in a narrow range below $3,750 during Thursday’s Asian session, extending its sideways movement but staying above Wednesday’s swing low. The metal remains under pressure from Federal Reserve (Fed) Chair Jerome Powell’s cautious remarks earlier this week, which tempered expectations for aggressive policy easing. Still, geopolitical risks and a weaker outlook for the US Dollar are helping limit downside moves.
Despite Powell’s warning that cutting rates too aggressively could leave inflation unresolved, markets continue to price in additional easing. Traders expect the Fed to deliver further 25-basis-point cuts in both October and December, following this month’s initial reduction — the first since December. A softer US labor market backdrop has strengthened these expectations, keeping the dollar’s recent rally in check and providing support to gold.
Rising global tensions also buoy sentiment for the safe-haven asset. US President Donald Trump toughened his stance against Russia, urging NATO members to shoot down Russian aircraft violating their airspace. Moscow dismissed Trump’s remarks, vowing to continue its offensive in Ukraine. Meanwhile, Middle East tensions escalated as Iran-backed Houthi rebels claimed responsibility for a drone strike on Israel’s southern city of Eilat. Trump also reportedly pledged to Arab and Muslim leaders that he would block Israeli moves to annex the West Bank. Together, these developments keep safe-haven demand intact.
Traders now look ahead to fresh US macroeconomic data and comments from Fed officials for direction. The key highlight will be Friday’s release of the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, which could shape near-term USD demand and gold’s trajectory.
Technical Outlook: $3,700 Remains Pivotal
From a technical standpoint, repeated failure near $3,800 suggests possible bullish fatigue, especially with daily RSI readings still in overbought territory. On the downside, $3,700 is seen as critical support. A decisive break below could trigger deeper losses toward $3,650 and then $3,610–$3,600. On the upside, clearing resistance at $3,765 would open the path back to record highs near $3,790, with sustained buying above $3,800 reinforcing the broader uptrend.
