Gold (XAU/USD) stayed confined within a narrow range below $3,750 during Thursday’s Asian session, holding above Wednesday’s swing low. The metal’s upside remains capped after Federal Reserve (Fed) Chair Jerome Powell signaled caution earlier this week, tempering expectations for aggressive monetary easing. Still, a mix of factors is helping to underpin demand for the safe-haven asset.
Fed policy outlook and USD dynamics
Market participants continue to expect the Fed to deliver further rate cuts in October and December, following its 25-basis-point reduction earlier this month. Signs of a cooling US labor market reinforce the case for additional easing, limiting the strength of the US Dollar (USD), which recently touched a two-week high. This backdrop has kept traders from making strong bearish bets on gold.
Powell, however, emphasized that cutting rates too quickly could risk leaving inflation unchecked, potentially forcing the central bank to reverse course later. His remarks weighed on gold earlier this week, but the broader dovish policy outlook continues to cap further USD gains and provides a floor for the yellow metal.
Geopolitical tensions support safe-haven demand
Geopolitical risks remain another key driver. US President Donald Trump escalated rhetoric against Russia, urging NATO allies to shoot down Russian aircraft if they violate member airspace, and asserted that Ukraine, with European Union and NATO backing, could reclaim lost territory. Moscow swiftly rejected those claims, with Kremlin spokesperson Dmitry Peskov reaffirming Russia’s military objectives.
Separately, Trump assured Arab and Muslim leaders that he would oppose Israeli annexation of the West Bank. At the same time, Iran-backed Houthi forces in Yemen claimed responsibility for a drone strike on Israel’s southern city of Eilat. These developments have kept geopolitical uncertainty elevated, sustaining safe-haven flows into gold.
Traders eye key US data releases
Attention now shifts to upcoming US macroeconomic releases and speeches from Federal Open Market Committee (FOMC) officials. The US Personal Consumption Expenditure (PCE) Price Index, due Friday, will be closely watched for fresh direction on USD demand and near-term momentum in XAU/USD.
Technical outlook: $3,700 remains critical
From a technical standpoint, gold’s inability to breach the $3,800 threshold this week signals possible bullish exhaustion, especially with daily Relative Strength Index (RSI) levels still in overbought territory. Last week’s decisive breakout above $3,700, however, remains a key bullish trigger, suggesting dip-buying interest could re-emerge near that level.
A sustained move below $3,700 would risk triggering technical selling, potentially driving prices toward $3,650, with further downside open to the $3,610–$3,600 zone. On the upside, a push above $3,752 could face resistance at $3,765–3,766. A decisive break beyond $3,800 would likely set the stage for retesting the record highs near $3,790 and extend the month-long uptrend.
