Gold (XAU/USD) extended its rally into a sixth consecutive session on Tuesday, briefly touching a fresh all-time high above the $3,500 mark in Asian trading. The surge was driven by mounting expectations of a Federal Reserve rate cut this month, alongside safe-haven demand stemming from U.S. political and trade tensions as well as persistent geopolitical risks.
However, the yellow metal struggled to hold gains above the $3,500 psychological threshold, retreating modestly as a firmer U.S. Dollar capped upside momentum. With technical indicators flashing overbought signals, investors appear cautious ahead of a packed U.S. economic calendar this week.
Fed rate cut bets and political tensions underpin gold
Rising market confidence that the Fed will lower rates in September remains a key driver of bullion’s appeal. The CME FedWatch tool continues to show elevated odds of a 25 basis point cut, reinforcing demand for non-yielding assets like gold.
At the same time, political controversy surrounding the central bank’s independence has added further support. Treasury Secretary Scott Bessent defended President Donald Trump’s dismissal of Fed Governor Lisa Cook, while Trump renewed his criticism of Fed Chair Jerome Powell for not cutting rates more aggressively.
A federal appeals court ruling that Trump’s reciprocal tariffs were illegal — a case now headed for the Supreme Court — has also deepened market uncertainty, boosting gold’s safe-haven demand.
Geopolitical risks remain in play
Beyond U.S. politics, global tensions continue to bolster demand for safe-haven assets. Escalating conflicts in Ukraine and the Middle East are keeping risk sentiment fragile, adding another tailwind to gold’s multi-day rally.
Market focus shifts to U.S. economic data
Investors are now awaiting a series of critical U.S. economic releases that could influence Fed policy expectations. The calendar kicks off with Tuesday’s ISM Manufacturing PMI, followed by JOLTS job openings on Wednesday. Thursday will bring ADP private payrolls and ISM Services PMI, before culminating with Friday’s highly anticipated Nonfarm Payrolls (NFP) report.
Traders are expected to remain cautious ahead of these releases, which could provide fresh directional impetus for gold.
Technical outlook: consolidation likely before next leg higher
Gold’s breakout above the $3,440 supply zone last week — the top of a three-month trading range — marked a decisive bullish trigger. However, with the daily Relative Strength Index (RSI) hovering in overbought territory, the metal’s failure to sustain levels above $3,500 suggests a period of consolidation may be necessary before the next move higher.
Immediate support lies at the $3,475–3,474 area, coinciding with Tuesday’s Asian session low. A sustained break below this level could see gold test the $3,440 former resistance-turned-support. A decisive move under $3,440 might prompt deeper corrective selling toward the $3,410–$3,400 zone. On the upside, a clear acceptance above $3,500 would open the door to further gains, with next resistance seen at $3,550.
