Gold Retreats After Powell’s Rate Cut Boost.
Gold retreats after recent rally fuelled by Powell’s rate cut comments
FUNDAMENTAL OVERVIEW:
Gold prices eased slightly on Monday, giving back some of their recent gains after a sharp rally driven by dovish remarks from Federal Reserve Chair Jerome Powell, which boosted expectations for interest rate cuts. However, demand for the metal was capped as investors shifted toward riskier assets amid growing bets on lower U.S. rates.
Although gold and other metals briefly benefited from a weaker dollar, their momentum faded quickly, with Friday’s rally proving short-lived. Haven demand remained limited as traders flocked to equities, sending Wall Street higher on Friday and Asian markets sharply up on Monday.
Powell suggested last week that the Fed could consider rate cuts in September, particularly as the labor market shows signs of cooling. Still, he cautioned that no decision had been finalized, pointing to persistent inflation and uncertainties surrounding President Donald Trump’s trade tariffs. While his comments pressured the dollar and lent support to commodities priced in it, metals quickly lost steam as investors pursued stronger returns in higher-yielding, risk-driven assets.
GOLD TECHNICAL ANALYSIS CHART:
Technical Overview:
Gold is trading within an up channel.
Gold is moving above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in Buying Zone, while the Stochastic oscillator suggests Positive trend.
Immediate Resistance level: 3400.00
Immediate support level: 3341.32
HOW TO TRADE GOLD
After a strong rally, gold faced repeated rejections and subsequently entered a consolidation phase. Despite several attempts to break higher, it continued to encounter resistance on the upside. Recently, however, gold found support after a decline, reversed sharply, and surged by breaking a key resistance level. If it sustains above this zone, the metal could extend its upside momentum further.