Gold prices (XAU/USD) retreated from the $4,500 psychological level on Wednesday, as traders moved to book profits following strong gains over the previous two sessions. The pullback came after the metal touched a one-week high during the Asian session, with a broadly risk-on tone in global markets weighing on immediate upside momentum.
Still, downside pressure remains limited as geopolitical tensions and expectations of US Federal Reserve (Fed) rate cuts continue to underpin demand for the safe-haven asset.
Markets have largely absorbed news of the recent US military strike on Venezuela, prompting a modest improvement in risk sentiment. However, persistent geopolitical flashpoints continue to offer support to gold, including US President Donald Trump’s renewed threats to annex Greenland and increasingly confrontational rhetoric toward Colombia and Mexico.
Geopolitical risks and Fed expectations keep gold supported
Despite the latest bout of profit-taking, gold continues to draw underlying support from an uncertain geopolitical backdrop. Trump has openly warned that Colombia and Mexico could face US military action as part of a broader campaign against criminal networks, while the White House confirmed that options for acquiring Greenland, including potential military involvement, are under discussion. These developments add to existing global tensions stemming from the stalled Russia–Ukraine peace process, unrest in Iran, and ongoing instability in Gaza.
At the same time, rising expectations for Fed rate cuts are limiting any sustained recovery in the US Dollar, which remains a key tailwind for non-yielding assets such as gold. According to the CME Group’s FedWatch tool, markets are increasingly pricing in a rate cut as early as March, followed by another reduction later this year. Richmond Fed President Thomas Barkin reiterated that future policy adjustments will depend heavily on incoming data, highlighting risks to both employment and inflation objectives.
US macro data in focus as traders await direction
Investors are now turning their attention to a heavy slate of US economic releases that could shape the next directional move in gold. Wednesday’s calendar includes the ADP private-sector employment report, ISM Services PMI, and JOLTS Job Openings, all of which may offer short-term volatility.
The spotlight, however, remains firmly on Friday’s US Nonfarm Payrolls report and next week’s US inflation data, which are expected to provide clearer signals on the Fed’s rate-cut trajectory.
These data releases are likely to be pivotal for US Dollar dynamics in the near term and, by extension, for gold prices. Until then, traders appear reluctant to take aggressive positions, keeping XAU/USD confined to a consolidation phase below recent highs.
Technical outlook: pullback remains corrective for now
From a technical perspective, gold remains supported despite the recent retreat. The 100-hour Simple Moving Average continues to trend higher and sits below spot prices, offering dynamic support near the $4,400 region.
Momentum indicators show some loss of bullish strength, with the Moving Average Convergence Divergence slipping below its signal line and remaining in negative territory. The Relative Strength Index has eased to around 48.6, indicating neutral momentum following the latest correction.
In the near term, gold would need to see momentum stabilize to revive its bullish bias. A move by the RSI back above 50 and signs of a bullish MACD crossover would strengthen the case for renewed upside. On the downside, initial support is seen in the $4,450–$4,445 congestion zone, followed by the 100-hour SMA near $4,400. As long as prices hold above this rising baseline, the broader trend remains constructive, though a sustained break below it could open the door to deeper losses.
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