Saad Ullah
Gold's having quite the day, pushing past $3,359 during Monday's European session - that's the highest we've seen in over a week. The yellow metal's catching a serious bid as the dollar takes a beating and global tensions keep everyone on edge.
XAU/USD Rides the Wave as Fed Rate Cut Bets Heat Up
Here's what's really driving this move: traders are getting increasingly convinced that the Fed's going to have to cut rates again in 2025, and honestly, the data's backing them up. The dollar's been getting crushed as concerns about America's fiscal mess keep piling up - we're talking about the greenback sliding back toward monthly lows here.
Friday's inflation numbers were pretty telling. The PCE Price Index dropped to just 2.1% year-over-year in April - that's the coolest it's been since February 2021. Even the core reading, which strips out all the noisy food and energy stuff, came in at 2.5%, down from 2.7% in March. That's exactly the kind of data that gets traders betting on rate cuts.
And they're not just hoping - they're actually pricing in September cuts now, with December looking like a real possibility too. Fed Governor Christopher Waller basically confirmed what everyone's thinking on Monday, saying rate cuts are still on the table this year, even if Trump's tariff plans might push prices up temporarily.
Geopolitical Chaos Sends Investors Running to Gold (XAU)
But it's not just about the Fed - the world's looking pretty messy right now, and that's gold's bread and butter. Ukraine just launched one of their biggest drone attacks ever on Russia, hitting military airfields across five regions and taking out over 40 aircraft, including some serious nuclear-capable bombers. This happened right before peace talks in Istanbul, which tells you everything about how those negotiations might go.
Then you've got the Middle East situation getting uglier by the day. Israel's flat-out denying they had anything to do with an incident that killed at least 30 Palestinians, pointing fingers at Hamas instead, claiming they fired on civilians trying to get humanitarian aid in Gaza. With all these conflicting stories flying around, nobody really knows what to believe.
It's no wonder equity markets are looking shaky. When stocks start wobbling and the world feels unstable, guess where money flows? Straight into gold. The technical setup didn't hurt either - once XAU broke above that stubborn $3,325-3,326 level, it was like opening the floodgates.
Technical Picture Looking Pretty Sweet for XAU Bulls
From a chart perspective, gold's got some serious momentum building. Breaking through that $3,326-3,328 resistance zone was huge, especially after bouncing off the 200-period EMA support on the 4-hour chart last week. That's textbook bullish behavior right there.
If we can push through the next hurdle around $3,345-3,350, then $3,400 starts looking very realistic. And if the bulls really get going, there's room to run all the way up to $3,432-3,434. That would be one heck of a move.
Of course, nothing goes straight up forever. If gold stumbles below $3,300, there's decent support around $3,280-3,278. Any dip below there could actually be a gift for buyers, with solid backing expected near $3,258-3,257 - that's where the 200-period EMA sits on the 4-hour timeframe. Break that level decisively though, and we could see a quick trip down to $3,200.
All Eyes on This Week's Fed Speakers and Economic Data
The real action this week's going to come from Fed communications. We've got Jerome Powell speaking later today, plus several other FOMC members throughout the week. These guys basically hold the keys to the dollar's fate, and by extension, gold's next big move.
Before that though, we're getting the ISM Manufacturing PMI today, which should give us a read on how America's factory sector is holding up. It might not seem like much, but in this environment where every data point matters for Fed policy, traders will be watching closely.
The bottom line? Gold's got multiple tailwinds right now. The dollar's weak, rate cut expectations are building, and the world's feeling pretty uncertain. As long as these conditions persist, don't be surprised if XAU keeps climbing. The combination of fundamental support and technical momentum is exactly what precious metals bulls have been waiting for.
This isn't just about one day's trading either - we're seeing a shift in sentiment that could have legs. With central banks staying dovish and geopolitical risks not going anywhere anytime soon, gold's looking like it might have found its groove again.
Saad Ullah
