• Gold outlook remains steady near $3,740 as investors await US inflation data.
• Fed policy outlook remains supportive despite Powell’s caution.
• Geopolitical risks in Europe and the Middle East underpin demand for safe havens.

Gold prices remained little changed on Thursday in the early European session, with spot trading near $3,740. A slightly weaker greenback provided interim support after falling from the all-time highs of $3,791 marked earlier this week. The precious metal saw a significant decline on Wednesday as the Fed expressed uncertainty about the next rate cuts, emphasizing data dependency and the risk of elevated inflation.

The markets remain focused on the Fed’s policy direction after delivering the first cut of the year in its last meeting. While Fed Chair Powell remained cautious about quicker future rate cuts, Fed officials, such as Mary Daly, signaled a need for more reductions before the end of 2025.

The Fed’s gradual approach towards a more accommodative stance shows concerns regarding a slowing labor market that have curbed the dollar’s bullish momentum. Combined with geopolitical worries, the demand for gold remains underpinned as a hedge. After President Trump urged NATO to take a hard stance against Russia, the tension between Russia and Ukraine escalated further. In the Middle East, Iran-backed Houthis took responsibility for a drone attack on Israel, adding more to the safe-haven flows.

Overall, the outlook for gold remains bullish, as the Federal Reserve is expected to ease further, thereby amplifying investor appetite for a non-yielding asset.
 

Key Events Ahead: US Core PCE Index

The focus now turns to the US Core PCE Index data, due on Friday, which is the preferred inflation gauge for the Fed. The index is expected to rise 0.3 m/m and 2.7% y/y. A softer reading would reinforce more Fed easing. Moreover, today’s weekly jobless claims could also provide fresh signals on the labor market conditions. These data points are crucial in shaping expectations for the Fed’s upcoming meetings.
 

Gold price technical outlook: Pullback from all-time highs
 

(Click on image to enlarge)

Gold 4-hour chart
 

The gold’s 4-hour chart shows signs of bearish reversal as the price is wobbling below the 20-period MA. However, other key MAs are still tilting north, providing no clear bias at the moment. It means the precious metal is experiencing profit-taking after a solid bull run. The price can test immediate support at yesterday’s low of $3,715 ahead of the round number and 50-period MA at $3,700.

On the upside, immediate resistance is expected at $3,750, followed by $3,770, and then all-time highs near $3,791. The prices may consolidate at the current levels with limited downside, while the path of least resistance lies on the upside.

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