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Gold (XAUUSD) remains steady as political developments and the monetary policy outlook guide market direction. The Dollar showed initial strength ahead of key inflation data but has since lost momentum due to rising concerns over the Federal Reserve’s independence. Consequently, the combination of Vance’s remarks, Cook’s legal response, and Trump’s public statements has intensified pressure on the markets. At the same time, the Federal Reserve’s dovish signals, including support for a September rate cut, continue to favor gold. As attention shifts to the upcoming core PCE inflation data, gold remains in a consolidative phase, supported by technical strength and economic uncertainty.
 

Gold Rally in Focus with Fed Easing Hints and Inflation Data Looming

Gold continues to consolidate as the Dollar shows signs of strength. This strength was initially supported by policy shifts and market positioning ahead of key inflation data. However, recent political developments have started to weaken that momentum, adding uncertainty to the broader market outlook.

Notably, Vice President JD Vance acknowledged the weakening of the Federal Reserve’s independence, signaling a significant institutional shift. His remarks weighed on the Dollar and supported gold demand. On the same day, Fed Governor Lisa Cook filed a lawsuit against President Donald Trump over his attempt to remove her. Consequently, the move further intensified concerns over the Fed’s independence.

Furthermore, the situation intensified when Trump tweeted about a third property transaction involving Cook, referencing a Bloomberg article. He also claimed that a criminal referral had been made. Such statements have added volatility to the markets and raised concerns about political interference in central bank decisions. At the same time, Fed Governor Waller called for rate reductions beginning in September, suggesting that further easing may follow in the coming months. Market expectations remain high, with an 87% chance of a cut. Attention now turns to the core PCE inflation data. Any downside surprise could strengthen gold, while a stronger reading may boost the Dollar and limit gold’s upside.
 

Gold Approaches Resistance With Channel and Triangle Formation in Play

The gold chart below shows a strong bullish structure developing within a well-defined ascending channel. Since early 2024, gold has moved steadily higher, with each pullback finding support at the channel’s lower boundary. This steady price behavior supports the broader uptrend, which continues to hold despite brief periods of consolidation.
 

(Click on image to enlarge)

In recent months, gold has developed a symmetrical triangle near the top of this channel. This pattern indicates a phase of consolidation, where price action is compressing and market direction remains unclear. During this period, the price has repeatedly bounced between the upper and lower boundaries of the triangle. Most recently, a move above the triangle’s resistance line signals a possible breakout.

If the breakout holds, it may confirm a continuation of the broader bullish trend. Symmetrical triangles often precede strong moves. A sustained breakout could push gold toward $3,500 or higher, particularly if economic data supports a dovish Federal Reserve outlook. However, if gold fails to maintain this move, a pullback toward the midline of the channel near $3,300 is likely. Even with such a dip, the overall momentum remains bullish as long as gold stays within the channel.
 

Conclusion

Gold remains supported by political tensions, expectations for rate cuts, and technical strength. The symmetrical triangle breakout within the broader ascending channel suggests a bullish continuation. However, all eyes are now on the upcoming PCE inflation data. Weaker-than-expected data could strengthen expectations for rate cuts and drive gold higher. Conversely, a stronger print might limit short-term gains.

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