Gold (XAU/USD) remains well-supported heading into the European session, trading close to the one-and-a-half-week high set earlier on Wednesday. Softer US inflation signals and a growing chorus of dovish comments from Federal Reserve officials have boosted expectations for another rate cut, driving the US Dollar to a one-week low and providing a firm tailwind for bullion.
Tuesday’s US PPI report signaled cooling price pressures, while multiple Fed policymakers endorsed further policy easing – a combination that continues to favor the non-yielding metal.
Risk appetite limits safe-haven demand
Expectations for lower US rates are also lifting broader risk sentiment, with global equities supported by ongoing hopes for a Russia–Ukraine peace framework. This risk-on tone has limited fresh safe-haven inflows into gold. Still, the underlying macro backdrop suggests the path of least resistance for XAU/USD remains tilted to the upside, keeping downside corrections shallow and likely to attract dip-buyers.
Daily digest: dovish Fed bets and softer USD underpin gold
US PPI rose 2.7% year-on-year in September, marginally above the prior 2.6% print and broadly in line with forecasts, while core PPI increased 2.9%. Retail Sales grew 0.2% in September, missing expectations for a 0.4% rise, and US consumer confidence dropped to a seven-month low, reinforcing concerns about a softer labor market.
Fed officials — including John Williams, Christopher Waller, and Stephen Miran – signaled support for additional easing, with markets now pricing an 85% probability of a 25 bp rate cut in December. The USD subsequently fell to a one-week low, allowing gold to extend its rebound during Asian trading on Wednesday.
On the geopolitical front, Ukraine signaled readiness to advance a US-backed peace framework, while President Donald Trump indicated flexibility on timing, adding to the improved market mood. Traders now turn to Wednesday’s US releases – Durable Goods Orders, weekly jobless claims, and Chicago PMI – along with remarks from key FOMC members for fresh intraday cues.
Technical outlook: constructive structure favors move toward $4,200
Gold has respected a strong confluence support zone — the 200-period EMA on the 4-hour chart and an ascending trend line from late October.
The subsequent rebound, backed by bullish oscillators on the 4-hour and daily timeframes, supports the case for additional upside. A break above the overnight high near $4,159 would reaffirm bullish momentum, opening the door to $4,177–4,178 on the way to the key $4,200 handle. A sustained move beyond $4,200 would set up a test of the monthly high near $4,245.
Downside levels to watch
Initial support is seen at $4,110–4,100. A decisive drop below this area would bring the confluence zone at $4,034–4,033 into focus. Losing that support could expose the $4,000 psychological level, followed by last week’s swing low at $3,968–3,967. Further weakness would target $3,931, the $3,900 level, and the late-October trough around $3,886.
