Gold (XAU/USD) is trading under pressure below the weekly high reached earlier on Thursday, though the metal continues to defend the $4,200 threshold in early European hours. The USD is pausing its post-FOMC decline and recovering modestly from its lowest level since October 24. This stabilization in the greenback, alongside a broader improvement in sentiment, is weighing on bullion despite its underlying safe-haven appeal.
That said, the Fed’s dovish stance is expected to limit any substantial USD upside, offering support to the non-yielding metal. Additionally, persistent geopolitical risks – particularly those linked to the prolonged Russia-Ukraine conflict – continue to cap the downside for gold. This mixed backdrop warrants caution among XAU/USD bears looking for a deeper correction.
Daily digest market movers
In a widely anticipated decision, the Fed cut interest rates by 25 basis points at the conclusion of its two-day policy meeting on Wednesday and signaled only one more cut in 2026. Markets, however, maintain expectations for two additional cuts next year following Chair Jerome Powell’s dovish tone.
Powell highlighted growing downside risks in the labor market and emphasized that the Fed does not intend to weigh on job creation. These comments pushed the USD to its weakest level since late October and drove gold to fresh weekly highs on Thursday.
However, Powell refrained from providing guidance on the timing of the next cut and acknowledged a more challenging path for further easing. Two hawkish dissents against even this week’s cut added uncertainty around the pace of policy normalization, limiting gold’s upside.
A constructive risk tone is also diverting flows away from safe-haven assets. Even so, stalled progress in Russia-Ukraine ceasefire negotiations keeps geopolitical tensions elevated, preventing traders from adopting aggressive bearish positions on bullion. The geopolitical backdrop intensified after Ukrainian drones disabled a Russian oil-linked tanker in the Black Sea – marking the third such incident in two weeks – while President Vladimir Putin reaffirmed intentions to secure the Donbas region by military or other means.
Given the conflicting forces at play, traders remain cautious ahead of Thursday’s US data releases, including Weekly Initial Jobless Claims and Trade Balance. These inputs, along with USD dynamics, will help shape gold’s near-term direction.
Gold awaits break above two-week range for a decisive move
Gold’s intraday retreat from the upper boundary of its two-week trading range signals hesitancy among bulls at higher levels. Still, constructive daily-chart oscillators suggest that dips below $4,200 are likely to attract buying interest, with initial support located at $4,170–4,165. A clear break beneath this zone would expose the $4,125–4,120 region, where the 200-period EMA on the 4-hour chart converges with an ascending trendline from the late-October low.
On the upside, bulls need a sustained break above the $4,245–4,250 supply zone to regain control. A move beyond this barrier could open the door toward the $4,277–4,278 resistance area, followed by a test of the $4,300 mark. Follow-through buying above these levels would confirm bullish momentum and pave the way for further near-term gains.
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