Gold (XAU/USD) trimmed some intraday losses on Tuesday, holding just above the $3,200 mark as the US Dollar dipped to a near two-week low. The softer dollar reflects rising market bets on Federal Reserve interest rate cuts in 2025, providing modest support to the non-yielding metal.
However, bullish momentum remains capped amid optimism over a 90-day US-China trade truce and hopes for a Russia-Ukraine ceasefire, which are fueling risk appetite and limiting gold’s safe-haven appeal. Traders now await key Federal Open Market Committee (FOMC) speeches for fresh cues on monetary policy and its impact on gold and the dollar.
The market remains cautious following Moody’s downgrade of the US sovereign credit rating to “Aa1” last Friday. Despite this, upbeat trade sentiment has blunted demand for gold as a haven. Weaker US inflation and retail sales data have increased expectations for at least two Fed rate cuts next year, keeping the dollar pressured.
Yet, Fed officials offer mixed signals. Atlanta Fed President Raphael Bostic expressed concerns about persistent inflation and suggested only one rate cut might materialize in 2024. New York Fed’s John Williams acknowledged strong recent data but highlighted ongoing economic uncertainties. Vice Chairman Philip Jefferson and Minneapolis Fed’s Neel Kashkari warned that trade-related tariff issues continue to cloud investor confidence and inflation risks.
Geopolitical developments add further complexity. Israeli military operations in Gaza escalate tensions, while US President Donald Trump announced talks between Russia and Ukraine aimed at a ceasefire, though details remain uncertain.
From a technical perspective, gold faces resistance near the 200-period simple moving average on the four-hour chart, around $3,250–$3,255. Failure to break this level could maintain downside pressure. Key support zones lie at $3,200 and $3,178, with a break below potentially driving prices toward $3,120 or lower.
Conversely, a sustained move above $3,250 could signal a bottoming and open the way for gains toward $3,275 and the psychological $3,300 level, which would tilt the near-term outlook in favor of buyers.
With no major US economic data scheduled for Tuesday, market focus remains on FOMC commentary and geopolitical developments that will shape gold’s direction in the near term.
