Gold breaks key resistance as Fed rate cut bets, China data, and trade tensions drive demand

Gold (XAUUSD) continues to climb as geopolitical tensions and evolving policy outlooks support safe-haven flows. The recent court ruling on U.S. tariffs reignited trade tensions and contributed to a sharp pullback in equities, pressuring broader markets. Meanwhile, stronger-than-expected manufacturing data from China has improved market confidence and reinforced gold’s upward momentum. In addition, rising expectations of Fed rate cuts, supported by soft inflation data, continue to increase interest in gold. Falling yields and growing uncertainty further enhance its appeal.

Gold gains on risk-off sentiment, China’s Manufacturing boost, and dovish Fed signals

Gold advances further, driven by growing market uncertainty and increased demand for safe-haven assets. The recent sell-off in Asian equities, led by Japan’s Nikkei 225, has prompted investors to seek safe-haven assets. A sell-off in U.S. technology stocks intensified fears of instability across financial markets. Meanwhile, a court ruling against Trump’s international tariffs has revived concerns over trade tensions. The administration is expected to proceed with negotiations. However, the court decision has added pressure to markets, driving gold higher.

Stronger-than-expected data from China has also fueled gold’s rise. Specifically, an unexpected increase in China’s Caixin Manufacturing PMI to 50.5 suggests the manufacturing sector is regaining momentum. As a result, stronger economic indicators from China lifted gold, reflecting expectations of increased demand for commodities. Moreover, the data reduced concerns about slower growth across global markets and provided fresh support for Gold’s upward momentum.

Furthermore, the central bank policy outlook continues to drive attention. The Fed is now widely expected to cut rates, following inflation data that matched market forecasts. As interest rates fall, non-yielding assets such as gold become more attractive. Additionally, soft signals from the Federal Reserve have reinforced this outlook, with attention now turning to labor market data. If upcoming economic data weakens, it would further strengthen the case for more rate cuts, adding additional support to gold.

Gold breaks out above key resistance, confirms bullish reversal

The gold chart below shows a clear breakout pattern, indicating a shift in market direction. Gold had been trading below a descending resistance line for several weeks. During this time, the price action developed a series of higher lows. Consequently, this formed an inverse head-and-shoulders pattern, a classic bullish reversal signal that typically indicates the end of a downtrend.

After several weeks of consolidation, gold finally broke above the neckline in late August and surged beyond resistance. This breakout represented a significant shift in technical structure. Moreover, the move was supported by rising volume and strong bullish momentum, both of which confirmed the breakout’s strength and credibility.

Gold initiated its breakout move around the $3,360 level, gaining momentum rapidly. Subsequently, gold moved past the $3,410 resistance before clearing the $3,440 level, a notable supply zone. The breakout candle was strong and decisive, showing no signs of bearish resistance. As a result, the trend remains strong, with no signs of reversal following the breakout. Currently, support rests at $3,440 and $3,410, providing a strong technical foundation for further gains. Overall, these levels are consistent with the broader bullish outlook driven by macroeconomic factors.

Gold outlook: Momentum builds on rate cut bets and geopolitical uncertainty

Gold’s breakout above the descending trendline and the $3,440 resistance level reinforces the prevailing upward momentum. The move reflects renewed safe-haven demand, macroeconomic support from China, and growing expectations of U.S. rate cuts. At the same time, with light trading volumes and increasing geopolitical risk, price action is likely to remain volatile. Nevertheless, technicals still point to a potential move toward the all-time high at $3,500. Moreover, this scenario becomes more likely if upcoming U.S. labor data and Fed commentary support the prevailing dovish outlook.

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