Gold eased slightly in Asian trading on Tuesday after touching a new record high near 3689 to 3690. The pullback comes as traders adjust positions ahead of several major central bank announcements. The US Federal Reserve is widely expected to cut interest rates by 25 basis points on Wednesday, marking its first reduction in nine months. The focus will be on updated economic forecasts and comments from Fed Chair Jerome Powell, which could guide expectations for the pace of future cuts.
Investors are also watching policy decisions from the Bank of Canada on Wednesday, the Bank of England on Thursday, and the Bank of Japan on Friday. These events are likely to increase market volatility. For now, the dip in gold appears more like profit-taking after a strong rally, especially as the daily chart shows overbought conditions. Geopolitical risks remain elevated, limiting the downside for the safe-haven metal and keeping the path higher in play.
Market drivers keep gold supported
The recent surge in gold has been fuelled by growing bets on a more aggressive Fed easing cycle following weak US Nonfarm Payrolls data. Traders expect three cuts this year, with the first coming this week. A weaker dollar, now near its lowest since late July, continues to support demand for gold.
Political developments add to the backdrop. The US Senate confirmed Stephen Miran to the Fed Board, while a court ruling prevented Trump from firing Governor Lisa Cook. At the same time, geopolitical risks remain high, with Russia intensifying strikes in Ukraine, Trump threatening tougher actions against Moscow, and Middle East tensions rising after Israel’s attack in Doha drew condemnation from Arab and Islamic leaders.
Technical outlook points to caution
Gold broke out of a bullish flag pattern overnight, confirming strong upward momentum. However, the Relative Strength Index on the daily chart remains deep in overbought territory, signalling that further gains above 3700 may be difficult without a pause.
Initial support lies around 3645 at the flag breakout point, followed by 3633. A drop below these levels could open the way toward 3610 to 3600. A deeper fall may expose the 3562 to 3560 area and eventually the 3500 psychological mark. On the upside, clearing 3700 decisively would strengthen the bullish case for fresh highs.
