Gold (XAU/USD) extended its intraday gains on Monday, rising to a one-week high near $3,359 during the early European session. A broad-based decline in the U.S. Dollar, combined with persistent risk aversion in global markets, continued to fuel demand for the safe-haven metal.
Macro Drivers: USD Weakness and Dovish Fed Bets Support Gold
The U.S. Dollar remains under pressure as concerns mount over the deteriorating U.S. fiscal outlook and growing market conviction that the Federal Reserve (Fed) will resume interest rate cuts later this year. The USD’s proximity to monthly lows is lending additional support to the non-yielding yellow metal.
Last week, the U.S. Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index fell to 2.1% year-over-year in April, marking the lowest level since February 2021. The core PCE, which excludes food and energy, eased to 2.5% from 2.7% in March—reinforcing expectations of a September rate cut and a potential follow-up in December.
On Monday, Fed Governor Christopher Waller reiterated that rate cuts remain on the table for later in 2025, even with recent tariff announcements expected to push inflation slightly higher in the short term.
Safe-Haven Demand Amplified by Rising Geopolitical Risks
Geopolitical tensions are also stoking safe-haven flows. Ukraine launched one of its most extensive drone assaults to date against Russian airbases across five regions on Sunday, reportedly damaging more than 40 military aircraft, including strategic bombers. These attacks come just ahead of a new round of direct peace talks in Istanbul.
Meanwhile, Middle East tensions remain high after Israel denied responsibility for a deadly incident in Gaza that claimed the lives of at least 30 Palestinians, instead accusing Hamas of targeting civilians awaiting aid. Conflicting reports continue to fuel uncertainty and risk-off sentiment globally.
Market Focus: Powell Speech and ISM PMI in View
Investor attention now turns to upcoming U.S. economic data and Fed commentary, with Fed Chair Jerome Powell scheduled to speak later today. His remarks, along with the release of the ISM Manufacturing PMI, are expected to influence short-term USD movements and gold price action.
Technical Outlook: Bulls Eye $3,400, Supported by Key Breakouts
From a technical standpoint, Gold’s break above the $3,326–$3,328 resistance zone—which had capped previous rallies—has activated fresh bullish momentum. The metal also moved past the $3,345–$3,350 intermediate resistance, positioning it for a potential retest of the $3,400 psychological level.
Further upside could target the $3,432–$3,434 zone, which marks the next significant resistance.
On the downside, immediate support lies near $3,300, followed by the $3,280–$3,278 range. A deeper pullback could attract dip buyers around the 200-period EMA at $3,258–$3,257. A decisive break below this level could open the door to a sharper correction toward $3,200.
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