Gold continues to swing within a familiar range near the $3,650 level, opening the week on a cautious note as traders prepare for a series of major central bank decisions.
Gold supported by weak China data
Monday’s mild uptick in XAU/USD comes after disappointing Chinese activity data for August raised expectations of fresh government stimulus. Industrial Production grew 5.2% YoY, slowing from July’s 5.7%, while Retail Sales slipped to 3.4% YoY versus 3.7% previously. Both figures undershot forecasts, fuelling speculation that Beijing may act to support growth.
Gold also drew support from a lack of progress in US-China trade talks held in Madrid on Sunday. The negotiations, focused on trade and tech issues including TikTok, will continue through Wednesday but so far show little momentum.
Spotlight shifts to the Fed
Markets remain cautious ahead of this week’s Federal Reserve meeting, where policymakers are widely expected to deliver a 25-basis-point rate cut. Traders are also speculating about the possibility of a larger 50 bps move, while pricing in as many as three rate cuts in 2025. With US labor market weakness, sticky inflation, and political pressure from President Trump, the Fed’s stance could prove decisive for Gold’s next big move.
Lower interest rates generally favour Gold by reducing the opportunity cost of holding the non-yielding asset.
Technical outlook
- Resistance: The all-time high at $3,675 is the first upside target, followed by $3,700. A break higher could open the door toward $3,750, where sellers may step back in.
- Support: Initial support sits at $3,600, with last week’s trough near $3,578 as the next level to watch. A clear move below this zone could extend losses toward the $3,550 handle.
Meanwhile, the 14-day RSI remains in overbought territory near 77, highlighting the risk of consolidation or a corrective pullback before bulls attempt another breakout.
This forecast is for informational purposes only and does not constitute investment advice.
