Gold News: Price Straddles $3658.03 Pivot After Fed Cut – Eyes on the Dollar

Gold Prices Forecast: Can Bulls Reclaim $3707 After Fed’s Cautious Cut?

Spot gold steadied on Thursday, trading near a key technical pivot at $3658.03, as traders digested the Federal Reserve’s 25-basis-point rate cut and Jerome Powell’s cautious tone on further easing. While gold briefly retreated from its recent all-time high of $3707.56, weakness in the U.S. dollar helped prices rebound late in the session.

At 10:29 GMT, XAU/USD is trading $3668.90, up $8.92 or +0.24%.

Fed Delivers Expected Rate Cut but Holds Back on Dovish Signals

The Fed lowered its benchmark rate by 25 basis points to 4.00%-4.25%, in a move described by Chair Powell as “risk management” amid a weakening labor market. However, the central bank signaled no urgency to push ahead with aggressive easing, stating that decisions would be made “meeting by meeting.” Traders now price in a 90% chance of another 25-bp cut at the next meeting in October, according to CME’s FedWatch tool.

Despite the Fed’s measured approach, the rate cut confirmed that policymakers are leaning toward easing, albeit gradually. Analysts at ANZ noted that gold tends to outperform early in easing cycles, especially when geopolitical tensions are elevated. Meanwhile, Goldman Sachs interpreted the Fed’s messaging as a signal that further cuts are on the table, depending on data.

Dollar Swings Offer Support for Gold Prices

The U.S. dollar initially rose on Powell’s comments, weighing on gold as it became more expensive for holders of other currencies. However, those gains reversed quickly, with the dollar index falling back toward 97.06 after touching a low of 96.224 on Wednesday — the lowest level since February 2022. This reversal supported gold’s late-session strength.

Elsewhere, Treasury yields slipped following the Fed’s decision. The U.S. 10-year yield dipped to 4.055%, while the 2-year fell to 3.528%. Lower yields tend to benefit non-yielding assets like gold, adding to the metal’s near-term attractiveness.

ETF Flows and Central Bank Policy in Focus

Despite bullish sentiment, SPDR Gold Trust saw a modest outflow, with holdings declining 0.44% to 975.66 tonnes on Wednesday. This points to some investor caution as markets assess the Fed’s intent and monitor other central banks. The Bank of England is expected to hold rates at 4%, while the Norges Bank cut rates again, reinforcing the global trend toward monetary easing.

Market Forecast: Bullish Bias Holds if $3658 Support Maintains

Technically, spot gold is hovering just above the minor pivot at $3658.03. A sustained move above this level would confirm bullish momentum and set the stage for a test of the $3707.56 all-time high. A break above this resistance opens the door to the September 23 swing target at $3879.64.

However, a failure to hold above $3658.03 could spark selling pressure toward $3612.73 and $3607.49 — the latter a key downside trigger.

For now, the bias remains bullish as long as support holds, with traders eyeing the Fed’s next steps and dollar direction as key catalysts.

More Information in our Economic Calendar.