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Gold has fallen to $3,296 per troy ounce, despite a weaker US dollar, as investors remain focused on the potential easing of Federal Reserve (Fed) policy.

Market expectations suggest that Donald Trump could announce his nominee for Fed chair as early as September or October, with the likely candidate favouring a more accommodative monetary stance.

Jerome Powell, the current Fed chair, has indicated that the absence of new trade duties is helping to curb inflation, potentially paving the way for multiple rate cuts, provided no aggressive tariffs are introduced after 9 July.

Recent Statdata revisions showed the US economy contracted by 0.5% in Q1 (final estimate), reinforcing expectations of a rate cut. However, this weak performance was partially offset by a drop in jobless claims, which fell to a five-week low, alongside an 11-year high in durable goods orders.

Investors are now awaiting the release of the PCE index, the Fed’s preferred inflation gauge.

Further pressure on gold stems from easing geopolitical tensions in the Middle East, reducing demand for safe-haven assets. Over the past five trading sessions, gold has remained on track for a second consecutive weekly decline.

Technical Analysis: XAU/USD

H4 Chart:

(Click on image to enlarge)

The market remains within a broad consolidation range around $3,344. Today’s downward extension reached $3,291, with the potential for a corrective rebound to retest $3,344 (from below) before a possible decline towards $3,237. This scenario is supported by the MACD indicator, with its signal line below zero but turning upward.

H1 Chart:

(Click on image to enlarge)

A downward wave structure has formed, reaching $3,290. A corrective upward move towards $3,344 is anticipated today, maintaining the consolidation range. A breakout below this range could open further downside potential, targeting at least $3,237. The Stochastic oscillator corroborates this outlook, with its signal line below 20 and rising sharply towards 80.
 

Conclusion

Gold remains under pressure amid shifting Fed expectations and reduced geopolitical risks, with technical indicators suggesting further volatility ahead.

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