Gold (XAU/USD) surged 2.61% last week, closing at $3,325.39 as Federal Reserve caution, a weaker U.S. dollar, and safe-haven demand fueled bullish momentum. With traders now pricing in up to 75bps in Fed rate cuts by year-end, this week’s CPI data and Fed Chair Powell’s speech could dictate gold’s next major move.
Key Drivers Behind Gold’s Rally
1. Fed Uncertainty Boosts Safe-Haven Appeal
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The Fed held rates steady, but Powell avoided clear guidance on future rate cuts.
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Markets now expect two to three rate cuts in 2024, with September as the likely starting point.
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Gold thrives in low-rate environments, making it a hedge against monetary policy shifts.
2. Dollar Weakness Supports Gold Demand
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The U.S. dollar (DXY) dipped 0.3% midweek, making gold cheaper for foreign buyers.
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Chinese demand rebounded post-holiday, while central banks continued steady purchases.
3. Geopolitical & Trade Risks Linger
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U.S.-China trade tensions eased slightly, but tariffs remain a concern.
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Global economic uncertainty keeps safe-haven demand for gold elevated.
Technical Outlook: Can Gold Sustain Its Rally?
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Trend: Bullish (A break above $3,500.20 confirms a new uptrend).
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Support Levels:
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$3,166.46 (50% retracement)
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$3,018.52 (Key Fibonacci level)
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$2,692.05 (52-week moving average)
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Resistance: $3,500 (Psychological barrier)
Trading Strategy:
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Buy on dips near support levels.
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A strong CPI print or hawkish Powell comments could trigger a pullback.
This Week’s Key Events: Will Gold Break Higher?
1. U.S. CPI Inflation (Tuesday)
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Core CPI Forecast: +0.2% MoM / +2.8% YoY
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Higher inflation = Delayed Fed cuts = Gold pressure
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Lower inflation = Rate cut bets rise = Gold rally
2. Fed Chair Powell’s Speech (Thursday)
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Any hints of a dovish shift could boost gold prices.
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Hawkish tone may strengthen the dollar, weighing on XAU/USD.
3. U.S. Retail Sales (Thursday)
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Weak consumer spending could reinforce economic slowdown fears, supporting gold.
Final Forecast: Gold’s Next Move Hinges on Fed & Data
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Bullish Case: If CPI cools and Powell signals rate cuts, gold could target $3,500.
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Bearish Risk: Sticky inflation + hawkish Fed may push gold toward 3,100−3,200 support.
Bottom Line: Gold remains well-supported by Fed uncertainty, geopolitical risks, and central bank demand. This week’s CPI and Powell’s speech will be critical in determining whether the rally continues or faces a correction.
