The gold price (XAU/USD) extended its recovery momentum during the early Asian session on Wednesday, trading with a positive bias above the $3,350 mark. This rebound follows a moderate pullback from a multi-week high touched on Tuesday, as dip-buyers returned to the market amid a backdrop of mixed macroeconomic indicators, Federal Reserve policy expectations, and persistent geopolitical tensions. 

The yellow metal remains well-supported as the market cautiously anticipates further cues from upcoming US economic data and potential developments in the US-China trade standoff. Raliplen’s expert team explores the topic in detail through this article.

Fundamental Tailwinds Driving Gold’s Upside Momentum

The recent strength in gold prices is underpinned by a confluence of supportive fundamental factors, notably the soft undertone in the US Dollar (USD), dovish market expectations regarding Federal Reserve rate cuts, and heightened fiscal concerns in the United States.

Despite stronger-than-expected JOLTS data, which revealed 7.39 million job openings in April, surpassing both consensus and March’s figures, the USD struggled to sustain its rebound from a six-week low. 

This disconnect reflects investor focus on declining US Treasury yields, increasing confidence in easing inflation, and the broader belief that the Fed will cut interest rates at least twice before year-end. 

Geopolitical Risks and Trade Uncertainty Reinforce Safe-Haven Demand

Beyond monetary policy dynamics, geopolitical developments and trade-related tensions continue to boost safe-haven demand for gold. A possible call between the US President and Chinese President Xi Jinping, slated for later this week, is expected to address worsening US-China trade relations. 

Market sentiment remains fragile as investors weigh the impact of higher tariffs on steel and aluminum imports, which doubled to 50% as of Wednesday.

These trade frictions elevate economic uncertainty and increase the appeal of precious metals, particularly gold, amid fears of a prolonged stagflationary environment. Supporting this view, Fed Governor Lisa Cook highlighted the inflationary consequences of escalating tariffs, suggesting they may slow growth while fueling price pressures. 

Her comments, echoed by Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic, highlight internal divisions within the Fed over the pace and scale of any future rate cuts.

Technical Setup: XAU/USD Supported Above Key Levels

From a technical standpoint, the XAU/USD pair is benefiting from sustained bullish momentum after a breakout above the $3,324–$3,326 resistance zone earlier this week. This level now acts as immediate downside support. The recent bounce above $3,355 confirms the return of buyers, reinforcing the outlook that the path of least resistance remains to the upside.

Momentum oscillators on both daily and intraday charts are positioned in positive territory, indicating strength in the prevailing trend. However, the bulls face a technical barrier near $3,380, followed by the $3,400 psychological handle. A decisive break above this zone could open the door for a retest of April’s all-time high, with the next upside target aligning near the $3,500 milestone.

On the downside, any weakness below the $3,355 area is likely to see renewed buying interest around the former resistance turned support near $3,324–$3,326. A break below this zone could expose the $3,300 level, and further selling may bring the $3,286–$3,285 support into focus.

Market Focus: US Macro Releases and Fed Speakers Ahead

Investors are now awaiting high-impact US economic data, including the ADP private-sector employment report and the ISM Services PMI, both due later today. These releases will serve as a precursor to Friday’s Nonfarm Payrolls (NFP) report, which carries significant implications for the Fed’s interest rate trajectory.

Alongside the data, Fed speak will remain a key market mover. Remarks from FOMC members, especially those with voting power, will be closely watched for clues on how the central bank balances inflation concerns with growing signs of economic fragility.

A more dovish tone from Fed officials could reinforce expectations for monetary easing, thereby dampening real yields and pushing the USD lower, a scenario that favors further strength in gold prices.

Conclusion: Outlook for Gold Remains Constructively Bullish

In summary, the gold market is currently supported by a broad spectrum of positive drivers: softening US inflation outlook, Fed rate cut expectations, fiscal policy uncertainties, geopolitical risk premiums, and ongoing trade-related volatility. 

With the XAU/USD pair trading above $3,350 and maintaining proximity to recent highs, dip-buyers appear firmly in control, eyeing a potential breakout above $3,380–$3,400 as the next technical catalyst.

Unless incoming US data or Fed rhetoric materially shifts sentiment, the gold price is likely to remain buoyed in the near term. Should bulls manage to propel the yellow metal past the $3,400 level, a march toward the $3,500 psychological mark and fresh all-time highs cannot be ruled out. Conversely, a sustained break below $3,324 may prompt a deeper pullback, but with strong fundamentals intact, such dips are expected to be shallow and short-lived.