Gold price (XAU/USD) remained stubbornly near daily lows on Friday, just below the $3,300 level, as the US Dollar (USD) gained renewed strength. The modest recovery in the greenback has been supported by positioning ahead of the release of data, as well as trade policy. Consequently, there has been a downward pressure on the non-yielding yellow metal.
Gold has firm support from fundamental geopolitical issues and expectations of future rate cuts by the Federal Reserve, but the immediate bias remains bearish ahead of today’s important US Personal Consumption Expenditures (PCE) Price Index report, which is a favored measure of inflation by the Federal Reserve.
USD Recovery, Trade Tensions Weigh on Gold
On Friday, the US Dollar saw dip buyers as traders re-positioned for the PCE inflation data that could predispose the next policy decision by the Fed. However, the US federal appeals court reinstated tariffs from former president Donald Trump, creating more uncertainty and reducing the desire for risk assets. Many of these factors have limited gold’s upside, including failing to run up to resistance levels over the gold price of $3,325.
Geopolitical Risks Offer Limited Support
Although gold has faced some bearish pressure, there has not yet been a complete selloff due to ongoing instability around the globe. With continued conflict in Ukraine and the Middle East, combined with a renewed ceasefire negotiation between Israel and Hamas, investors have remained somewhat tethered to assets like gold as a haven.
Moreover, concerns of a worsening US fiscal situation and the belief that there will also be another round of cuts in long-dated rates have limited downside for gold and other precious metals.
Fed Rate Cut Bets Remain in Play
Comments from Fed officials this week have kept the door open for rate cuts later in 2025. While the Fed remains data-dependent, policymakers including Mary Daly and Austan Goolsbee have acknowledged the potential for easing if inflation slows and the labor market holds up.
Markets are currently pricing in two 25 basis point rate cuts by year-end, making today’s PCE data pivotal for shaping expectations—and for influencing gold’s next move.
Gold Technical Analysis
From a technical standpoint, gold remains vulnerable while trading below the $3,325 resistance zone. Momentum indicators on the 4-hour chart suggest continued bearish traction, with the next key support level seen at $3,280. A break below that could expose $3,245 and possibly $3,200 in the near term.
On the flip side, a strong rebound and close above $3,326 could shift the outlook back to bullish, opening the path toward $3,345 and then $3,400.
All Eyes on PCE Data for Gold’s Next Move
Gold prices remain under pressure amid a stronger dollar and trade-related uncertainties, but potential Fed easing and geopolitical risks are acting as buffers. With the US PCE inflation report on deck, traders should brace for increased volatility as the market digests its implications for interest rates, the USD, and the XAU/USD outlook.
About The Author
