Gold rises on rate cut bets and weak US economic data

Gold (XAUUSD) is gaining momentum as market expectations for Federal Reserve rate cuts continue to rise. Recent U.S. economic data has supported this view, with inflation pressures easing and consumer sentiment weakening. Fed officials have signaled a shift toward policy easing, which has pressured the U.S. Dollar. In response, gold has pushed higher and is now consolidating near recent highs. This combination strengthens the case for continued upward momentum.

Gold gains momentum on soft US data and Fed rate cut outlook

Gold is pushing higher and approaching recent highs as markets increase bets on further Federal Reserve rate cuts. Recent macroeconomic data from the U.S. has strengthened this outlook. The latest Producer Price Index showed a modest uptick, but remained in line with forecasts. Core PPI rose 2.9% year-over-year, signaling that inflationary pressures continue to ease. Meanwhile, U.S. retail sales rose just 0.2% in September, falling short of the 0.4% forecast and pointing to weaker consumer demand. These indicators support the case for policy easing.

Moreover, consumer sentiment is also showing signs of weakness. The Conference Board’s Consumer Confidence Index fell to a seven-month low, highlighting increasing concerns over labour market conditions. Multiple Fed officials acknowledged these concerns. John Williams said that easing policy wouldn’t threaten inflation control, and Christopher Waller cited job market softness as a reason to support a December cut. These remarks solidified the market’s belief that easing is on the horizon.

Currently, markets are pricing in an 85% chance of a 25-basis-point cut in December. The U.S. Dollar responded with a broad pullback, falling to a one-week low. This decline reduced the opportunity cost of holding gold, which does not yield interest. As a result, gold prices moved higher following the latest economic data and Fed remarks. These conditions strengthen the case for further gains in the metal.

Gold holds within broadening wedge after breakout and pullback

The gold chart below shows that the price continues to trade within the boundaries of a well-defined ascending broadening wedge, maintaining a steady bullish structure. Price climbed consistently through late 2024 and early 2025, forming a clear sequence of higher highs and higher lows. A broad consolidation phase set the stage for a breakout above horizontal resistance marked by red dashed lines. This breakout confirmed the bullish trend and propelled the metal toward the upper boundary of the wedge.

Following the breakout, the price accelerated sharply and extended its upward move. The widening structure of the broadening wedge highlighted the increase in volatility during gold’s upward move. Price surged toward the upper edge of the wedge, where momentum finally paused near $4,400. This area acted as dynamic resistance, triggering a pullback that brought gold back toward the central part of the structure.

Currently, gold is consolidating above the $4,000 level, holding steady within the mid-range of the broadening wedge. Despite recent swings, the pattern remains intact, suggesting the trend has not been invalidated. If bullish momentum strengthens, the price could revisit the upper wedge boundary. On the other hand, if sellers gain control, key support near $3,900 and along the lower wedge line will be crucial in preventing a deeper decline.

Gold outlook: Rate cut bets and weak data fuel momentum

Gold remains well-positioned for further upside as both macro and technical factors align in its favor. Soft inflation data, weakening consumer sentiment, and dovish signals from Federal Reserve officials have increased the likelihood of policy easing. This shift has pressured the U.S. Dollar and boosted gold’s appeal. At the same time, the price structure remains intact within a broadening wedge, with recent pullbacks holding above key support. As long as gold maintains this structure and rate cut expectations persist, the broader trend continues to point higher.