Photo by Dmitry Demidko on Unsplash
 

Gold (XAUUSD) prices are moving cautiously as traders react to rising political pressure on the U.S. Federal Reserve. A weakening U.S. Dollar and ongoing geopolitical tensions between Iran and Israel also influence market sentiment. Market participants expect potential interest rate cuts by the Fed, which has pushed the dollar to a multi-year low, increasing gold's appeal as a safe-haven asset. Meanwhile, the fragile Middle East ceasefire has supported risk sentiment but failed to ignite a strong rally in gold. In this mixed environment, traders await clear signals from upcoming economic data and technical levels to determine the next direction of gold.
 

Gold Price Volatility Driven by Fed Policy Uncertainty, Dollar Weakness, and Geopolitical Risk

Multiple fundamental factors are currently driving the gold price. One of the primary drivers is the growing political pressure on the U.S. Federal Reserve. Reports indicate that President Donald Trump is considering replacing Fed Chair Jerome Powell due to disagreements over interest rate policy. This development introduces uncertainty regarding the central bank's independence and adds volatility to financial markets.

At the same time, investors are pricing in potential rate cuts by the Fed, possibly as early as July. These expectations stem from signs of economic weakness and Trump's implementation of aggressive tariffs. As a result, the U.S. Dollar has dropped to a three-year low, making gold more attractive as a non-yielding, inflation-protective asset.

Geopolitical dynamics are also in play. A tentative ceasefire between Israel and Iran has slightly lifted global risk sentiment. However, ongoing concerns about Iran's nuclear program and the possibility of renewed tensions are keeping investors cautious. In this environment, gold has struggled to extend gains as traders await decisive signals. Attention now shifts to upcoming U.S. economic data, including GDP, jobless claims, and inflation figures, which could influence expectations for the Fed's policy path and determine the next directional move for gold.
 

Technical Analysis: Gold Holds Steady within Technical Range of $3,140 - $3,440

The gold chart below shows a clear consolidation phase following a strong rally earlier in the year. Gold surged aggressively in Q1 2025, moving from under $2,800 to a peak above $3,400. However, since April, prices have been trapped in a broad horizontal range between approximately $3,140 and $3,440.

The consolidation zone is marked in the chart, reflecting market indecision. Price action remains choppy within this band, indicating that neither bulls nor bears are in complete control. Resistance near the $3,440 level has capped upside attempts, while support around $3,140 has held firm during sell-offs.

(Click on image to enlarge)

Currently, gold is trading near $3,330, closer to the upper range of this consolidation. However, multiple rejections near the top suggest that a stronger conviction is needed for a breakout. A daily close above $3,440 could open the door to fresh highs and resume the uptrend. On the other hand, a break below $3,140 would invalidate the bullish structure and suggest a deeper retracement.

For now, traders should wait for confirmation through volume and price action. A breakout beyond this consolidation range could provide the next directional cue. Until then, gold remains in a holding pattern, with technical indicators mirroring the fundamental uncertainty in the broader macroeconomic environment.
 

Conclusion

Gold prices are holding steady amid a weak U.S. Dollar, political pressure on the Federal Reserve, and a cautiously optimistic geopolitical backdrop. While the metal attracts some buying interest, the lack of strong bullish momentum suggests traders are awaiting clearer signals. Technically, gold is consolidating within a defined range. A decisive move above $3,440 or below $3,140 will likely determine the next big trend. Until then, patience and disciplined risk management remain key. 

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