Gold (XAU/USD) attracted fresh dip-buying at the start of the week, pausing Friday’s mild pullback from the $4,260 region — its highest level since October 21. Persistent US Dollar (USD) weakness, driven by dovish Federal Reserve (Fed) expectations, continues to act as a tailwind for the non-yielding metal in Monday’s Asian session.
Gold holds steady as markets await FOMC
Despite support from a soft USD, XAU/USD remains trapped within a tight range that has dominated price action for more than a week. Traders are avoiding major directional bets ahead of Wednesday’s FOMC decision, which will include updated economic projections, the dot plot, and remarks from Fed Chair Jerome Powell.
All eyes are on the Fed’s rate-cut trajectory – the key catalyst for the next major move in both the USD and Gold.
Daily digest: dovish Fed expectations and geopolitical tensions support XAU/USD
US data released late Friday showed the headline Personal Consumption Expenditures (PCE) Price Index rising 2.8% YoY in September, in line with expectations. Core PCE — the Fed’s preferred inflation gauge — eased slightly to 2.8% from 2.9% in August, reinforcing the view that inflation is cooling.
Softening labor market conditions have also strengthened the case for further easing. The CME FedWatch Tool shows markets pricing in nearly a 90% chance of a rate cut this week, with strong expectations of another reduction by April 2025.
This dovish stance has prevented the USD from staging any significant rebound from its late-October lows, supporting additional demand for Gold.
Geopolitical tensions also underpin XAU/USD, with Russia launching a large missile-drone attack on Ukraine’s energy infrastructure and slow progress in peace negotiations.
Still, despite supportive fundamentals, bullish conviction is limited as traders await the Fed’s outcome before committing to new long positions.
Gold technical outlook: XAU/USD needs a range breakout for direction
The 200-hour Exponential Moving Average (EMA) – currently near $4,190 – has acted as a reliable support zone since early December. A decisive move below this level could trigger technical selling, exposing the $4,164–$4,163 zone (monthly swing low). A break beneath that area would bring sub-$4,100 levels into focus, aligned with a short-term ascending trend-line from late October. A clear break would signal a bearish shift.
On the upside, the $4,250–$4,260 region remains the immediate ceiling. A sustained break above would open the door toward $4,277–$4,278, followed by a potential move to retest the $4,300 mark.
A confirmed breakout above this range would reinforce bullish momentum and resume the broader uptrend that began in late November.
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