Gold price (XAU/USD) held firm during early European trading on Wednesday, hovering near a one-and-a-half-week high, buoyed by a combination of macroeconomic and geopolitical factors.
Market sentiment increasingly suggests that the Federal Reserve will implement further interest rate cuts in 2025. This growing conviction stems from softening inflation and a weakening U.S. economic outlook, both of which have contributed to sustained pressure on the U.S. Dollar. The greenback slid to a two-week low, further supporting demand for the precious metal.
In addition to dovish Fed expectations, lingering U.S. fiscal concerns continued to weigh on the Dollar. Moody’s recent downgrade of the U.S. government’s credit rating—citing ballooning deficits—has compounded negative sentiment and driven investors toward safe-haven assets like gold.
Geopolitical Risk Boosts Safe-Haven Demand
Renewed trade friction between the United States and China, alongside broader geopolitical tensions, is further enhancing gold’s appeal. China has publicly condemned the Trump administration’s latest export control measures, accusing Washington of violating international trade rules. Specifically, Beijing criticized U.S. restrictions on advanced chips, labeling the actions as “unilateral bullying and protectionism.”
Separately, CNN reported Tuesday that new U.S. intelligence points to Israel potentially preparing strikes on Iranian nuclear facilities. This development has added another layer of geopolitical uncertainty, contributing to the precious metal’s upward momentum.
Fed Officials Highlight Economic Uncertainty
Federal Reserve officials have expressed growing concerns about the U.S. economic trajectory, particularly in light of unpredictable trade policies. Cleveland Fed President Beth Hammack warned of increasing stagflation risks and emphasized that policy uncertainty is complicating economic management.
St. Louis Fed President Alberto Musalem echoed these concerns, noting that both businesses and consumers are showing hesitation in decision-making. Meanwhile, Atlanta Fed President Raphael Bostic projected a slowdown in economic activity, highlighting consumer vulnerability to renewed inflationary pressures.
Recent U.S. economic data, including weaker-than-expected retail sales and signs of easing inflation, has bolstered market expectations of multiple rate cuts. Traders are currently pricing in at least two 25-basis-point reductions before year-end.
Technical Indicators Support Bullish Outlook
From a technical standpoint, gold broke decisively above the $3,250–$3,260 range—aligned with the 200-period Simple Moving Average on the 4-hour chart—sparking a new wave of bullish momentum. The price has since breached the psychological $3,300 threshold, supported by positive indicators on both hourly and daily charts.
Analysts now see the next key resistance zone around $3,360–$3,365. A sustained break above this level could pave the way for a climb toward the $3,400 mark.
Downside Risks Remain Limited
Should prices retreat, initial support is expected around the $3,285 region. Further declines may attract buying interest near the previous resistance zone of $3,250–$3,260, now acting as a support base. A decisive break below this range could trigger additional technical selling, pushing gold down toward the $3,200 level. Deeper losses may see the metal test support near $3,178–$3,177, with potential for an extended decline toward $3,120 or even $3,100—the lowest level since April 10.
