The gold price (XAU/USD) edged higher during Monday’s early US session, building on the momentum gained during Asian trading hours and climbing towards a fresh daily high near $3,317.
This intraday advance in the yellow metal reflects a blend of macroeconomic, geopolitical, and technical factors, all converging to offer support for gold in the current environment. Brokers at TelaraX explore this topic in full detail in this article.
Weaker USD Acts as Tailwind for Gold
A major catalyst behind Monday’s firm upward trajectory in gold is the modest weakness in the US Dollar (USD). The greenback remains on the back foot, pressured by a combination of dovish Federal Reserve expectations and persistent fiscal uncertainty surrounding the United States.
After Friday’s release of cooler-than-expected Personal Consumption Expenditures (PCE) data, market participants intensified their speculation of a September rate cut by the Federal Reserve (Fed).
The headline PCE index, the Fed’s preferred inflation gauge, fell to 2.1% YoY in April, its lowest reading since February 2021. Meanwhile, the core PCE, which excludes volatile food and energy components, dropped to 2.5%, further supporting the narrative that inflation is easing.
This moderation in price pressures underpins the belief that the Fed may have room to ease monetary policy later this year, likely in September, with some analysts even eyeing a second rate cut in December.
Supporting this view, Fed Governor Christopher Waller acknowledged Monday that rate reductions remain plausible despite ongoing global trade pressures and the inflationary risks they may present.
As interest rate expectations shift lower, the USD becomes less attractive, especially against non-yielding assets like gold, which benefits from a low-rate environment. The result is a broadly weaker dollar, which makes gold cheaper for holders of other currencies, stimulating additional demand for the precious metal.
Technical Structure: XAU/USD Poised for Breakout
From a technical perspective, the XAU/USD pair is showing signs of resilience and bullish intent. The pair has recovered from Friday’s modest pullback, extending gains and threatening a test of the $3,326–$3,328 resistance zone.
This region represents a key near-term supply barrier, and a decisive breakout above this threshold could trigger a fresh wave of buying momentum.
A sustained move beyond $3,328 could see gold prices rally toward the next resistance at $3,345–$3,350, with further upside potential targeting the psychologically significant $3,400 level. If bulls maintain control, the ultimate upside objective could lie in the $3,432–$3,434 area, a zone that could act as a magnet for price in a bullish extension.
Conversely, immediate downside support sits at the $3,300 round figure, followed by a stronger floor near the $3,280–$3,278 zone. Any deeper correction is likely to attract buyers near the $3,258–$3,257 region, which marks the 200-period Exponential Moving Average (EMA) on the 4-hour chart.
A break below this level, however, could change the short-term tone and expose gold to a drop toward the $3,200 mark.
Key Events to Watch: Powell’s Speech and ISM Manufacturing PMI
Looking ahead, traders will closely monitor a series of macroeconomic events and Fed speak that could offer further directional cues. Fed Chair Jerome Powell is scheduled to speak later Monday, and his commentary will be pivotal in shaping near-term expectations around interest rates and US Dollar movements.
Markets are also bracing for the release of the ISM Manufacturing PMI, a leading indicator of economic activity and inflationary pressures in the manufacturing sector.
These events could induce short-term volatility in both the USD and gold prices. Given the current mix of weaker inflation, rising geopolitical risks, and dovish Fed bets, any additional confirmation of economic softening or policy easing may reinforce the existing bullish narrative for gold.
Conclusion: Bullish Gold Bias Remains Intact Amid Uncertainty
In conclusion, the gold price remains well-supported near the top of its intraday range as the market digests a confluence of favorable macro and geopolitical inputs. The USD weakness, coupled with rate cut expectations, a risk-off sentiment, and ongoing global tensions, continues to drive demand for the safe-haven asset.
While short-term volatility is expected around upcoming data releases and Fed communications, the fundamental and technical backdrop favors continued strength in XAU/USD. Traders will watch closely to see if gold can muster the momentum needed to decisively clear the $3,328 level, which could open the door to larger gains in the sessions ahead.
