Photo by Dmitry Demidko on Unsplash
 

Gold (XAUUSD) is holding firm despite recent pullbacks, supported by weakening U.S. economic data and growing expectations of Fed rate cuts. Slower job growth and a rising unemployment rate have raised concerns about the labor market. At the same time, dovish signals from key Fed officials and rising geopolitical tensions are boosting demand for safe-haven assets. These factors are creating a supportive environment for gold in both fundamental and technical terms.
 

Gold Supported By Dovish Fed Signals and Slowing U.S. Economy

Gold’s pullback comes after a strong rally driven by expectations of continued Fed policy easing. Recent U.S. labor data highlighted underlying weakness, with November’s Nonfarm Payrolls rising by just 64,000 and October figures revised sharply lower. The unemployment rate also climbed to 4.6%, marking its highest reading in several years. These signals have strengthened the case for further interest rate cuts in the months ahead.

Meanwhile, market sentiment continues to reflect dovish signals from key Fed officials. Governor Christopher Waller suggested that additional rate cuts may be needed to bring policy back to a neutral stance. He also stressed the need for caution amid persistent inflation. In contrast, Atlanta Fed President Raphael Bostic opposed immediate easing but noted that rate cuts could be appropriate if inflation trends lower. Despite mixed messages, markets continue to interpret the overall tone as supportive of further easing.

Additionally, political factors are playing a growing role. Former President Donald Trump stated he would appoint a new Fed chair who favors “much lower” interest rates. His comments, combined with rising geopolitical tensions, particularly around Venezuela’s oil exports, have added to global risk sentiment. These developments support the safe-haven appeal of gold, especially in a low-rate environment.
 

Gold Forms Broadening Wedge with $4,700 Target in Focus

The gold chart below shows a well-formed ascending broadening wedge that has shaped price action since late 2024. After stabilizing near the lower boundary, gold broke higher and advanced toward the upper band of the wedge. This structure indicates expanding volatility and a steady uptrend, with new highs being gradually established.
 

(Click on image to enlarge)

Furthermore, a sequence of smaller inverse head-and-shoulders patterns emerged over several months, each contributing to the strength of the broader uptrend. These formations created a stair-step structure, with price steadily advancing after each breakout. The latest pattern has formed just below a key neckline, where gold is currently testing resistance. A confirmed breakout above this level could signal fresh momentum toward the $4,700 area.

Gold is nearing a critical breakout level that could define the next stage of its upward move. A sustained move above $4,350 would confirm the next phase of the breakout. Although short-term pullbacks may occur, the broader technical setup remains bullish. The chart supports the current uptrend and indicates that further gains are likely.
 

Gold Outlook: Macro Drivers and Chart Patterns Support Further Gains

Gold remains well-positioned for further gains as macroeconomic weakness, dovish Fed signals, and rising political uncertainty continue to align in its favor. Soft labor data and cautious Fed commentary have raised expectations of a prolonged easing cycle. At the same time, growing geopolitical risks are strengthening gold’s safe-haven appeal. Technically, the broadening wedge and breakout patterns suggest expanding upside potential. A sustained move above $4,350 could accelerate momentum toward the $4,700 level.

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