Gold (XAU/USD) found dip-buying interest near the $3,620 level during Asian trading on Wednesday, pausing its retracement from Tuesday’s all-time high. The precious metal remains supported by firm expectations that the Federal Reserve will cut interest rates next week and deliver up to three reductions by year-end. Persistent geopolitical tensions and political instability in France and Japan are also adding to the metal’s safe-haven appeal.
USD recovery and risk appetite cap gains
The US Dollar continues to build on its rebound from late-July lows, partly driven by repositioning ahead of key US inflation data. Meanwhile, upbeat sentiment in global equity markets is limiting gold’s upside momentum, though the overall fundamental backdrop still favors buyers on dips. Traders now await US Producer Price Index (PPI) data later today, followed by Consumer Price Index (CPI) figures on Thursday, to gauge the Fed’s policy path.
Market movers: fed policy outlook, political instability, geopolitical tensions
Weaker-than-expected US labor data last week reinforced expectations of three Fed rate cuts by December, with CME FedWatch also reflecting a small chance of a 50-basis-point cut at next week’s FOMC meeting. Political risk remains elevated: France’s Prime Minister François Bayrou resigned after losing a confidence vote, while Japan’s Prime Minister Shigeru Ishiba announced plans to step down as LDP leader. On the geopolitical front, Israel’s airstrike in Doha targeting Hamas leadership has escalated tensions, drawing condemnation and raising risks for ceasefire negotiations. Meanwhile, Poland heightened air defenses after intensified Russian strikes near its border, with reports of possible NATO airspace violations.
Technical outlook: consolidation likely amid overbought conditions
Gold’s daily Relative Strength Index (RSI) remains in overbought territory, suggesting a period of consolidation or a modest pullback before further upside. Immediate support lies at $3,600, followed by the weekly low at $3,580. A break below could open the door toward $3,565–3,560 and last week’s swing low near $3,510. On the upside, resistance is seen at $3,640–3,645, ahead of the record high at $3,675. A sustained move above could pave the way toward the $3,700 psychological level, though momentum may remain capped in the near term.
