Is the Gold Rally Losing Momentum Despite Dovish Fed Signals?
Spot gold traded flat on Wednesday, consolidating just below record territory after Tuesday’s high failed to generate follow-through buying. While bullish momentum remains intact, swing chart analysis reveals a potential early sign of weakness, with prices stalling well below the projected target of $3879.64. Importantly, the market did not post a closing price reversal top on the last session, tempering any immediate bearish conviction.
At 10:47 GMT, XAU/USD is trading $3763.43, down $0.77 or -0.02%.
To resume the uptrend, gold must break above $3791.26, which would expose the next major target at $3879.64. Conversely, a dip toward the 50% retracement level at $3709.61—drawn from the $3627.96 to $3791.26 range—would likely attract dip buyers given the prevailing bullish structure. This area remains technically significant and a likely test zone for short-term support.
Fed Chair Powell Keeps Traders Guarded on Rate Path
Gold’s underlying strength continues to be supported by falling Treasury yields and cautious commentary from Federal Reserve Chair Jerome Powell. On Tuesday, Powell warned of “two-sided risks” facing the U.S. economy—rising inflation pressures versus softening labor market conditions—stating that “there is no risk-free path.”
The 10-year yield declined to 4.114%, while the 30-year yield slipped to 4.726%, offering additional tailwinds for gold as real rates ease.
Markets are now focused on Friday’s Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge. The print is expected to clarify the timing and scale of future rate cuts. The Fed already delivered its first 25 basis point cut last week, and traders are now pricing in two more this year—one in October and another in December—with probabilities of 93% and 79%, respectively, according to CME FedWatch.
Dollar Index Rebounds but Fails to Cap Gold’s Appeal
The U.S. Dollar Index rose 0.35% to 97.575 on Wednesday, rebounding from recent lows after Powell reiterated a cautious stance on further easing. Despite the bounce, safe-haven flows into gold remained resilient, fueled in part by geopolitical risks. NATO’s warning to Russia and increasing tensions in Eastern Europe continue to support a defensive posture in gold positioning.
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See all Gold forecastsGold Price Forecast: Bullish Bias Intact with $3709.61 Key Support
The gold market remains structurally bullish above $3709.61, with upside potential toward $3879.64 if $3791.26 is breached. While the flat session signals temporary consolidation, falling yields, dovish Fed expectations, and persistent geopolitical risk underpin safe-haven demand.
Traders should watch Friday’s PCE release for confirmation; a soft print will likely accelerate rate cut pricing and spark another gold breakout.
More Information in our Economic Calendar.
