Daily Price Outlook
Gold (XAU/USD) started the week on a positive note but remains under pressure below the key $3,000 level, oscillating in a tight range after touching an all-time high of $3,004.94 on Friday.
Despite the near-term bullish bias, the precious metal is struggling to gain momentum amid global trade war fears and expectations of Federal Reserve rate cuts.
However, the uncertainty surrounding escalating trade tensions and geopolitical risks continues to fuel safe-haven demand for gold, preventing any major downside moves.
Trade War Concerns and Fed Rate Cut Bets Support Gold
On the US front, the broad-based US dollar is losing its strength as traders expect the Federal Reserve to cut interest rates multiple times this year.
This is happening because the US labor market is showing signs of slowing down, and inflation is becoming softer, which is affecting economic growth. As a result, markets believe the Fed may cut interest rates by 25 basis points in June, July, and October.
The sentiment in the market is shifting from a "Trump put" to a "Fed put," meaning investors are now more focused on the Federal Reserve's actions rather than government policies. This shift comes as recession risks grow due to the US administration's aggressive trade policies.
Moreover, the University of Michigan’s Consumer Sentiment Index has dropped to its lowest level in two and a half years. This decline further supports the idea that the Fed might take a more accommodative approach by lowering interest rates.
Since lower interest rates make the US dollar weaker, this situation is making gold more attractive to investors. Gold, being a non-yielding asset, tends to perform better when interest rates fall, as holding cash or bonds becomes less profitable.
Geopolitical Tensions Drive Investors Toward Gold as Safe-Haven Asset
On the geopolitical front, rising tensions are making gold even more attractive to investors. The Houthi leader, Abdul Malik al-Houthi, has warned that his group may target U.S. ships in the Red Sea in response to recent U.S. airstrikes. In reaction, the U.S. defense secretary has confirmed that military action against the Houthis will continue.
At the same time, an Israeli drone strike in Gaza over the weekend led to multiple casualties, including journalists. These ongoing conflicts are creating uncertainty in global markets, pushing investors toward safer assets like gold.
Gold's Gains Limited as China's Stimulus Boosts Risk Sentiment
Despite bullish factors, gold’s upside remains capped by improving risk sentiment, supported by China’s latest economic stimulus measures. China’s State Council introduced a special action plan to boost domestic consumption and income growth.
Moreover, Shenzhen eased its housing provident fund policies to support the struggling property sector. These developments lifted investor confidence, limiting further gains in safe-haven assets like gold ahead of the key FOMC decision on Wednesday.
Gold Traders Await Key U.S. Data and Fed Decision for Market Direction
Moving ahead, traders will keep their eyes on Monday’s U.S. economic data, including Retail Sales and the Empire State Manufacturing Index, to get fresh insights into the economy. However, the main focus will be on Wednesday’s Federal Reserve meeting (FOMC decision), as it will play a key role in shaping the direction of the U.S. dollar and gold prices in the coming days.
Meanwhile, analysts at UBS have raised their gold price target to $3,200, showing confidence in gold’s long-term strength. However, if there is a short-term correction, gold may find support around $2,850.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is consolidating near $2,985.56, showing modest gains of 0.03%, as investors weigh market catalysts.
The metal remains within a tight trading range, with key resistance at $3,005.25 and immediate support at $2,966.81.
The 50-day EMA at $2,951.89 is reinforcing a bullish structure, suggesting buyers remain in control, but momentum is slowing ahead of critical economic events.
A breakout above $3,005.25 could push gold toward the next resistance levels at $3,019.99 and $3,032.43, potentially triggering another bullish leg higher.
Conversely, a failure to hold above the $2,982.42 pivot could lead to a decline toward $2,966.81, with further downside potential at $2,954.61 and $2,939.24 if selling pressure intensifies.
Technical indicators reflect a bullish bias, with gold holding above its 50-day EMA ($2,951.89), signaling underlying strength.
However, price action remains in consolidation mode, awaiting fresh triggers from upcoming Federal Reserve rate decisions and economic data.
The weaker U.S. dollar and persistent geopolitical risks continue to support gold, but short-term profit-taking could cause temporary pullbacks.
For now, traders are watching the $2,982.42 pivot level as the key inflection point. A sustained break higher would reinforce bullish momentum, while a move below could accelerate selling pressure.
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