Gold (XAU/USD) traded flat near $3,440 during Thursday’s Asian session, caught between a weakening US Dollar and easing geopolitical tensions in the Middle East. While the Dollar sank to its lowest level since March 2022 amid renewed pressure on Fed independence, investor optimism over the Israel-Iran ceasefire capped the upside for the traditional safe-haven metal.
The yellow metal held modest gains from the previous day but showed no strong bullish conviction as traders await crucial macroeconomic data and commentary from Federal Reserve officials.
Fed Independence Concerns Weigh on USD, Offer Some Support to Gold
Gold received limited support as Fed Chair Jerome Powell came under fresh criticism from US President Donald Trump for delaying rate cuts. Trump’s remarks hinting at replacing Powell raised fears over Fed independence, reinforcing expectations of a dovish pivot by the central bank.
Market sentiment has already priced in at least 50 basis points of Fed rate cuts by year-end, keeping pressure on the non-yielding US Dollar and offering a floor to gold prices.
Ceasefire Optimism Offsets Gold’s Safe-Haven Appeal
While the ceasefire between Israel and Iran remains fragile, it is holding and helping to boost investor risk appetite. Trump, meanwhile, has declared victory in the region, casting doubt on how badly damage was done to Iran’s nuclear infrastructure.
Although this cessation of hostilities diminishes the geopolitical risk premiums that rationalize a higher gold price, the fragility of the truce creates unpredictability. For this reason, we can expect XAU/USD to stay fairly range-bound until the market can more clearly assess the ongoing sustainability of this truce and input from the Fed.
Gold Traders Brace for PCE Inflation Data as Technical Pressure Mounts
Investors are now anticipating another important sequence of U.S. economic data releases, including final Q1 GDP, durable goods, jobless claims, and pending home sales. That said, the most important data will come from the Friday Personal Consumption Expenditures (PCE Price Index), the preferred measure of inflation by the Federal Reserve. The result may significantly influence interest rate expectations and market direction for both the U.S. Dollar and gold.
From a technical standpoint, gold remains under pressure after falling below a short-term ascending channel line. The $3,300 support remains intact, but it is still a bearish outlook unless prices reclaim the $3,370 resistance area. Downside levels to pay attention to below are $3,245 and the larger area of support around the $3,210–$3,175 range. If bulls can hold above $3,400, there may be near-term momentum back in their favor to target $3,452 and the all-time high of $3,500
Conclusion
Gold remains stuck in a tug-of-war between a bearish US Dollar and declining safe-haven demand amid global calm. Traders are likely to stay on the sidelines ahead of Friday’s PCE data, which could determine gold’s next directional breakout.
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