Photo by Rene Böhmer on Unsplash
 

Gold (XAUUSD) continues to struggle for momentum as shifting macro conditions shape market direction. Safe-haven demand remains limited, with a stronger U.S. Dollar pressuring the metal. The Dollar’s strength reflects persistent hawkish signals from the Federal Reserve, which have reduced the probability of a December rate cut. Rising yields have added to the headwinds, capping gold’s near-term upside. Market focus now turns to upcoming economic data and Fed commentary for fresh policy signals.
 

Gold Struggles as Dollar Strength and Fed Signals Limit Upside

Gold is struggling to hold ground, with price action showing limited follow-through. Its response to market uncertainty remains muted, weighed down by persistent Dollar gains. The U.S. currency continues to draw support from hawkish commentary by Federal Reserve officials, which has sharply reduced expectations for policy easing. The CME FedWatch Tool now shows only a 42% chance of a December rate cut. That decline has lifted yields and pressured gold, which typically performs better in more accommodative environments.

Meanwhile, Vice Chair Philip Jefferson signaled a cautious approach. He stated that the Fed should “proceed slowly” with any additional cuts due to persistent inflation concerns. His remarks align with recent statements from other officials, indicating that policymakers are not ready to shift toward easing. As a result, investors have turned more defensive, focusing on the strength of the U.S. economy rather than expecting near-term policy easing.

At the same time, upcoming economic data could shift this balance. The delayed release of the September jobs report has heightened anticipation. If labor market data shows further weakness, it could revive expectations for policy easing. However, until that happens, the Dollar is likely to remain firm, and gold could face continued headwinds in the short term. Markets will watch Fed officials closely for any change in tone that could impact rate expectations.
 

Gold Consolidates Within Rising Channel after Overhead Rejection

The gold chart above shows a well-defined ascending channel that has guided price action since mid-2023. Within this structure, gold has consistently respected both support and resistance lines, forming a bullish pattern of higher highs and higher lows. The central dashed line served as a midpoint, with price frequently returning to it during consolidation phases. This steady channel reflects strong underlying momentum, even as short-term pullbacks occur.
 

(Click on image to enlarge)

Gold broke above the top of its rising channel, briefly entering an extension zone highlighted by the red dashed line. This breakout reflected strong upside momentum and signaled an overextended move. However, the advance proved unsustainable, and the price soon pulled back into the channel, suggesting the extension zone acted as temporary resistance. The correction has since brought gold back toward the midpoint of the channel, where price is now attempting to stabilize.

Despite the recent weakness, the broader structure remains intact. The rising channel continues to guide long-term price action, and the recent pullback may represent a constructive reset within the broader uptrend. As long as gold remains above the midpoint of the ascending channel, the broader uptrend remains intact. A decisive move back toward the upper extension zone would likely require a softer Dollar or dovish Fed commentary, while a break below the midpoint could signal a deeper correction.
 

Gold Outlook: Fed Caution Weighs on Price, Channel Structure Holds

Gold remains in a long-term ascending channel, but recent price action shows limited strength. Persistent Dollar gains and cautious Fed signals continue to cap upside potential. Focus now turns to upcoming labour market data and Fed commentary for new direction. Signs of economic softness could support renewed easing expectations and lift gold. Until then, the metal may trade sideways with a bias toward further consolidation. 

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