Gold News: Dollar Slides to 2-Week Low, Lifting Gold Prices and Trader Sentiment

Gold Edges Higher as Weaker Dollar and Rate Cut Bets Fuel Demand

Gold prices extended gains on Wednesday, supported by a weakening U.S. Dollar and a drop in Treasury yields as traders ramped up bets on a September rate cut by the Federal Reserve. Spot gold pushed above its 50-day moving average at $3349.20, establishing this level as near-term support, while reclaiming the pivot at $3353.58 signaled bullish intent.

At 11:27 GMT, XAU/USD is trading $3360.36, up $12.01 or +0.36%.

Fed Rate Cut Odds Surge on Mild U.S. Inflation Data

Tuesday’s softer U.S. CPI report triggered renewed expectations of monetary easing, with markets now pricing in a 98% probability of a rate cut in September, per CME FedWatch Tool. Some traders are even debating the likelihood of a 50 basis point move following comments from U.S. Treasury Secretary Bessent. July inflation data showed minimal pass-through from import tariffs, reducing concerns that trade measures were stoking consumer prices.

Giovanni Staunovo, a commodity analyst at UBS, noted that incoming data and dovish Fed commentary could unlock further upside for gold. He cautioned, however, that prices may consolidate until stronger signals emerge around the Fed’s pace of easing.

Dollar Index Slips to Two-Week Low, Boosting Bullion Appeal

The Dollar Index fell to 97.76, its lowest since July 28, making gold more attractive to foreign buyers. The dollar’s weakness was compounded by political uncertainty, with President Trump reportedly considering legal action against Fed Chair Jerome Powell—raising concerns about central bank independence. ING strategist Francesco Pesole confirmed the CPI report was “dollar-negative” and reinforced expectations for Fed policy easing.

The weaker greenback also lifted major currencies, including the euro and sterling, offering additional support to gold via the forex channel.

Bond Yields Slide as Traders Reprice Inflation and Growth Risks

U.S. Treasury yields dropped across the curve, with the 10-year falling 4 basis points to 4.254% and the 2-year dipping to 3.712%. Lower yields reduce the opportunity cost of holding non-yielding assets like gold, reinforcing demand. Analysts at Deutsche Bank highlighted that while the inflation outlook remains murky, tariff-related price effects have yet to show a consistent pattern.

Traders now shift focus to upcoming U.S. data releases, including Thursday’s PPI and Friday’s retail sales, which could further influence Fed policy expectations.

Gold Prices Forecast: Bullish Bias as Technicals Align with Policy Tailwinds

Technically, gold’s move above the 50-day MA and the $3353.58 pivot signals bullish momentum. A break above $3370.30 may open the door to last week’s high at $3409.43, with further gains toward the $3439.04–$3451.53 resistance zone. Conversely, a failure below the 50-day MA could trigger a decline toward $3331.17 or $3310.48.

With Treasury yields retreating, the dollar weakening, and the Fed likely to cut rates next month, the gold prices forecast leans bullish in the near term.

More Information in our Economic Calendar.