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Gold (XAUUSD) is under pressure after a sharp rally above $5,500. The recent decline follows renewed strength in the U.S. Dollar and uncertainty over future policy direction. A mix of political developments, a Fed rate pause, and growing focus on the upcoming Fed Chair nomination have created a cautious tone in the market. At the same time, ongoing geopolitical risks continue to support long-term demand for safe-haven assets like gold.
 

Gold Retreats Amid Dollar Strength and Fed Transition Risks

Gold’s recent pullback reflects a surge in U.S. Dollar strength driven by key political and economic shifts. The Wall Street Journal reported that President Trump and Senate Democrats reached an agreement to avoid a government shutdown. This news boosted market confidence and pushed the Dollar higher, reducing gold’s appeal in the short term.

Meanwhile, the Federal Reserve’s decision to hold rates steady added to the pullback. Although policymakers maintained a cautious stance, the lack of new guidance triggered profit-taking after gold’s extended rally. With major developments on the horizon, market participants turned more cautious. The rate pause may still favor gold over time, but in the near term, it created space for a correction.

Attention now turns to the upcoming Fed Chair nomination, which is adding to market pressure. Bloomberg reports that former Fed Governor Kevin Warsh is a leading candidate for the role. Known for his hawkish stance, Warsh’s appointment could signal a shift toward tighter monetary policy, potentially strengthening the Dollar and creating additional headwinds for gold. Even so, elevated geopolitical risks, including new U.S. tariff threats on Cuba and Canada, are likely to sustain safe-haven demand.
 

Gold Exits Decade-Long Channel, Starts Vertical Ascent

The gold chart below shows a clear breakout from a well-established ascending channel that shaped price action for nearly one decade. Throughout this structure, gold consistently posted higher highs and higher lows, reflecting solid underlying support. The trend remained intact, with price respecting both the upper and lower boundaries of the channel.
 

(Click on image to enlarge)

In 2025, gold decisively broke through the upper resistance of the channel. This breakout marked a critical shift from steady accumulation to vertical momentum. The breakout triggered a sharp rally that pushed gold beyond $5,500. Price action intensified once the prior ceiling started offering support. This phase confirmed a structural transition toward an accelerated bull market.

However, the current correction has driven gold into a deeper decline following its recent surge. After reaching a high near $5,600, the price has now retreated below $5,000. This area previously acted as a key barrier during the advance. If the pullback stabilizes near this level, the broader bullish structure may remain intact. A deeper break below could indicate the start of a more prolonged consolidation phase.
 

Gold Forecast: Fed Transition and Dollar Rally Weigh on Near-Term Direction

Gold remains in a volatile phase as markets digest rising Dollar strength, policy uncertainty, and leadership shifts at the Fed. While the recent correction has interrupted the rally, the broader uptrend still holds firm. Price action continues to respect long-term technical structures, and safe-haven demand remains supported by geopolitical risks. As markets await the Fed Chair decision and key economic data, gold’s next move will depend on how these catalysts shape sentiment in the days ahead.

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