Gold (XAU/USD) maintained its strength just below the $3,000 mark on Monday, holding near all-time highs as global economic uncertainties fueled safe-haven buying. Market sentiment remains cautious ahead of key U.S. economic data releases, while expectations for multiple Federal Reserve rate cuts in 2025 continue to support gold prices.
Gold’s surge last week was triggered by escalating trade tensions and geopolitical risks, pushing prices beyond the key resistance of $2,930 per ounce. Despite briefly touching the $3,000 psychological threshold, traders remain wary of potential short-term corrections. Technical indicators suggest gold is in overbought territory, signaling the possibility of near-term consolidation.
Federal Reserve Rate Cuts Could Drive Further Gains
The U.S. Federal Reserve’s stance on monetary policy remains a crucial factor for gold’s trajectory. Market analysts expect the Fed to implement at least three rate cuts this year, starting in June, following recent softer inflation data and a slowdown in labor market growth.
- Fed funds futures pricing: Markets anticipate a 75 basis point rate reduction by October.
- Consumer sentiment: The University of Michigan’s Consumer Sentiment Index fell to a 30-month low last week, reinforcing expectations of policy easing.
- Impact on the U.S. dollar: A weaker dollar, pressured by rate-cut expectations, has further bolstered gold prices.
However, optimism surrounding China’s stimulus measures, including an action plan to boost domestic consumption, has tempered some of the safe-haven demand.
Key Levels to Watch in Gold Price Action
From a technical perspective, gold’s breakout above $2,930 signaled strong bullish momentum, but overbought conditions on the Relative Strength Index (RSI) suggest a possible pullback.
- Immediate support: $2,956 – a key level for buyers.
- Major downside risk: A break below $2,930 could trigger a drop toward $2,900 and $2,880.
- Upside potential: A sustained move above $3,000 could open the door to fresh record highs.
Investors will closely monitor U.S. retail sales data and the Empire State Manufacturing Index for further market direction. However, the main event remains the Federal Open Market Committee (FOMC) meeting on Wednesday, which could set the tone for gold’s next major move.
