- Gold price extends its consolidative price move in the weekly trading range.
- The Fed’s hawkish pause acts as a headwind for the non-yielding commodity.
- Sliding US bond yields keep the USD bulls on the defensive and lend support.
Gold price (XAU/USD) oscillates in a narrow band near the top end of its weekly range during the Asian session on Thursday and remains close to a multi-month peak touched last week. A fresh leg down in the US Treasury bond yields is seen as a key factor acting as a tailwind for the commodity. Apart from this, concerns about the potential economic fallout from US President Donald Trump’s tariff plans further benefit the safe-haven precious metal.
Meanwhile, Trump’s demand for lower interest rates and signs of abating inflation in the US support the prospect for further policy easing by the Federal Reserve (Fed). This, in turn, suggests that the path of least resistance for the Gold price remains to the upside. That said, the Fed’s hawkish pause on Wednesday continues to underpin the US Dollar (USD), which, along with a positive risk tone, keeps a lid on the non-yielding yellow metal.
Gold price traders seem non-committed amid mixed cue; bullish bias remains
- The Federal Reserve held interest rates steady on Wednesday and signaled that there would be no rush to lower borrowing costs until inflation and jobs data made it appropriate.
- In the post-meeting press conference, Fed Chair Jerome Powell said that politics would not affect the central bank’s interest-rate calls and downplayed expectations for future rate cuts.
- Powell’s remarks reaffirmed the notion that rates will remain higher for longer amid caution over US President Donald Trump’s protectionist policies, which could reignite inflation.
- The yield on the benchmark 10-year US government bond struggles to build on the post-FOMC bounce from over a one-month low, capping the US Dollar and supporting the Gold price.
- Investors remain concerned about the potential economic fallout from Trump’s trade tariffs and protectionist policies, which further underpin the safe-haven precious metal.
- The highly-anticipated European Central Bank (ECB) monetary policy decision this Thursday could infuse some volatility in the markets and drive demand for the XAU/USD.
- The focus will then shift to the release of the closely-watched US Personal Consumption Expenditures (PCE) Price Index – the Fed’s preferred inflation gauge – on Friday.
Gold price might continue to attract dip-buyers ahead of the $2,725-2,720 area
From a technical perspective, the recent breakout through the $2,720-2,725 horizontal barrier and positive oscillators on the daily chart validate the near-term positive outlook for the Gold price. That said, it will still be prudent to wait for a subsequent strength beyond the $2,772-2,773 immediate hurdle before positioning for a move towards the $2,786 area, or the highest level since October 2024 touched last Friday. The momentum could extend further towards the all-time peak, near the $2,790 zone. Some follow-through buying, leading to a move beyond the $2,800 mark, will be seen as a fresh trigger for bulls and pave the way for an extension of a well-established uptrend witnessed over the past month or so.
On the flip side, weakness below the overnight swing low, around the $2,745-2,744 area could be seen as a buying opportunity but limited near the $2,730 region, or the weekly trough touched on Monday. This is followed by the $2,725-2,750 resistance-turned-support, below which the Gold price could accelerate the fall towards the $2,707-2,705 area en route to the $2,684 support zone.
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