Gold Price Rebounds from $3,120 as Fed Rate Cut Hopes Revive

Gold (XAU/USD) prices bounced back sharply after last week’s slide, regaining momentum above the $3,200 level as recession fears ease and the market eyes upcoming Federal Reserve rate cuts.

Key Highlights:

• Gold rebounds from strong support at $3,120 after worst week since November 2024.
• US Treasury yields pull back from recent highs but remain elevated.
• The US Dollar Index continues to consolidate below key resistance.
• Weakening inflation and persistent geopolitical risks keep the long-term gold outlook bullish.

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Gold Market Overview

After plunging to a low of $3,123 last week, gold prices recovered to close above $3,200 amid renewed safe-haven demand and cooling recession fears. The earlier decline was driven by a temporary surge in risk appetite following a 90-day trade truce between the US and China. However, signs of lingering economic vulnerabilities have revived investor interest in gold.

Recession Odds Fade, Risk Sentiment Improves

Top financial institutions including Goldman Sachs, J.P. Morgan, and Barclays have revised their US recession forecasts lower, citing stronger-than-expected economic resilience. This optimism, however, has dented gold’s short-term appeal, as capital flows shift toward riskier assets like equities.

At the same time, US Treasury yields remain elevated. The 10-year yield approached 4.60% before pulling back, supported by expectations that the Federal Reserve will keep interest rates higher for longer.

Rate Cut Bets Still in Play

Despite easing inflation and cautious Fed messaging, traders still expect at least two rate cuts in 2025, starting as early as September. This dovish outlook continues to underpin longer-term demand for gold, especially as geopolitical risks—including escalating tensions between the US and Iran, and the ongoing Russia-Ukraine conflict—add uncertainty to the global outlook.

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Technical Outlook – Gold (XAU/USD)

Daily Chart: Support Holds at 50-Day SMA

Gold found solid support at its 50-day Simple Moving Average (SMA), bouncing from $3,123 and forming a bullish hammer candle. RSI is stabilizing near the midline, signaling neutral momentum but suggesting consolidation could evolve into a new upward move.

🔸 Key Resistance: $3,370
🔸 Key Support: $3,120

4-Hour Chart: Positive Reversal Signals

On the 4H timeframe, gold bounced off a confluence of trendline support, with momentum building for a break above $3,300. A breakout here would likely confirm the next bullish leg toward the $3,370–$3,400 zone.

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Technical Outlook – Treasury Yields (TNX)

Daily Chart: Yields Above Key Averages

The 10-year US Treasury yield remains above its 50- and 200-day SMAs. Although Friday saw a dip to 4.40%, momentum stays bullish with upside targets near 4.62%. RSI remains above the neutral line, supporting the case for continued strength.

4-Hour Chart: Inverted Head & Shoulders Forming

A bullish reversal pattern is developing, and once consolidation ends, yields could resume their climb.

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Technical Outlook – US Dollar Index (DXY)

Daily Chart: Bearish Pressure Builds

The Dollar Index remains under pressure, unable to sustain gains above 102. The RSI hovering near the midpoint shows some support, but the structure suggests a potential drop toward the 100.30 level.

4-Hour Chart: Descending Channel in Focus

DXY is trading inside a clear descending channel. If price breaks below 100.35, it could revisit March lows near 98. A rebound above 102 would shift the bias back in favor of the bulls.

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Final Thoughts

While short-term volatility may challenge gold’s rally, the broader trend remains bullish amid cooling inflation, geopolitical unrest, and lingering macroeconomic risks. A sustained breakout above $3,300 could open the door to retesting $3,500 in the coming weeks.

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