Gold gained strong momentum on Monday and moved into new territory above 3680 after dipping toward 3620 earlier in the European session. Expectations that the Federal Reserve may take a softer stance on interest rates pushed US Treasury yields lower, giving XAU/USD more room to rise.
From a technical view, the daily Relative Strength Index remains in overbought levels. This supports the idea that gold may continue trading sideways for some time before the next big move higher. A break above the 3657 to 3658 resistance area could open the way for a retest of last week’s record high near 3675 and possibly a push toward the 3700 round number.
On the downside, the session low around 3627 to 3626 should act as the first support. Below that, the 3610 to 3600 zone comes into focus. A stronger decline under last week’s swing low near 3580 may expose gold to further losses toward 3565 to 3560, and eventually the 3500 psychological mark.
Fundamentals keep gold supported
Safe-haven demand continues to play a role as rising geopolitical tensions add to gold’s appeal. Still, the metal has been stuck in a narrow range for over a week, with traders waiting for clearer signals from the Federal Reserve’s upcoming policy meeting. While risk sentiment has improved slightly, any pullback in gold is likely to attract buying interest thanks to the supportive backdrop.
Markets eye Fed rate cuts
Investors expect the Fed to cut interest rates on Wednesday for the first time in nine months, with markets also pricing in two more cuts in October and December. This outlook has kept US bond yields subdued and the dollar close to its weakest level since late July, helping gold hold its gains.
Geopolitical tensions add fuel
Conflict risks remain high. Ukraine launched large-scale strikes on Russian energy facilities, while the US pushed NATO allies to enforce stricter sanctions. At the same time, Iranian officials urged Qatar to expel US troops and allow the deployment of Iranian missiles, keeping the Middle East on edge. These developments add to gold’s safe-haven strength.
Traders wait for key central bank decisions
Despite the bullish backdrop, gold traders are showing caution ahead of a busy week of central bank updates. The Bank of Canada and the Fed announce their decisions on Wednesday, followed by the Bank of England on Thursday and the Bank of Japan on Friday.
Markets will pay close attention to Fed Chair Jerome Powell’s remarks, along with updated economic forecasts and the dot plot, which will shape expectations for the path of US interest rates and the next direction for gold.
