Gold (XAU/USD) sustained its intraday gains above the $3,300 level during Wednesday’s Asian session, reaching a one-and-a-half-week high while building on a three-week uptrend. The precious metal’s rise is fueled by a combination of weakening U.S. dollar sentiment, expectations of Federal Reserve interest rate cuts in 2025, and ongoing concerns over U.S. fiscal health following last week’s sovereign credit rating downgrade.
The softening dollar, pressured by mounting doubts about the U.S. economic outlook, continues to act as a powerful tailwind for gold’s safe-haven appeal. On Tuesday, Federal Reserve officials voiced concerns about the U.S. economy amid uncertainties stemming from President Donald Trump’s trade policies. Renewed U.S.-China trade tensions have also reignited recession fears, further underpinning gold prices.
Technically, gold’s breakout above the $3,250–$3,255 resistance zone, followed by a decisive move past $3,300, confirms a bullish trajectory. This price action coincided with a key technical trigger—a breach of the 200-period Simple Moving Average on the 4-hour chart. Positive momentum indicators on hourly and daily charts reinforce the outlook for continued gains, with the next significant resistance clustered between $3,360 and $3,365. A sustained rally could push gold toward the psychologically important $3,400 mark.
On the downside, dips below the Asian session low near $3,285 are likely to attract buyers, supported by the $3,250–$3,260 range that has flipped from resistance to support. However, a break beneath this level could spark technical selling, potentially dragging prices down to $3,200. Further declines could target the $3,177–$3,178 support area and last week’s swing low near $3,120, edging closer to $3,100.
Additional factors supporting gold include geopolitical risks, notably fresh intelligence reports indicating that Israel may be preparing strikes on Iranian nuclear sites. This development adds a layer of uncertainty, bolstering gold’s safe-haven status.
Meanwhile, ongoing U.S. fiscal concerns weigh heavily on the dollar. Moody’s downgrade last Friday cited escalating deficits, and recent political moves—including President Trump’s push for a sweeping tax bill projected to add trillions to the national debt—continue to undermine confidence in the world’s largest economy.
Federal Reserve officials also highlighted risks of stagflation, with Cleveland Fed President Beth Hammack emphasizing the challenges posed by uncertain trade policies. St. Louis Fed President Alberto Musalem and Atlanta Fed President Raphael Bostic echoed concerns about slowing economic activity and cautious consumer behavior.
Finally, trade tensions between the U.S. and China remain high. China condemned U.S. export controls and restrictions targeting companies like Huawei, labeling such measures as protectionist bullying. This geopolitical friction further fuels safe-haven demand for gold amid growing global uncertainty.
In summary, a confluence of weak dollar dynamics, Fed rate cut expectations, fiscal vulnerabilities, and geopolitical risks underpin gold’s upward momentum, setting the stage for potential gains toward $3,360 and beyond.
