Gold nears technical breakout as Fed signals and legal rulings shake markets

Gold (XAUUSD) remains in focus as changing policy expectations and rising political risks influence market sentiment. A weaker U.S. Dollar, steady bond yields, and renewed confidence in a Federal Reserve rate cut have reinforced bullish momentum. At the same time, legal uncertainties and trade-related tensions are prompting defensive positioning, boosting demand for gold. Finally, the technical setup now supports the outlook for a breakout, which could be the market’s next key move.

Gold outlook strengthens on policy shift bets and institutional unrest

The U.S. Dollar Index (DXY) remains under pressure, hovering near recent lows. A weaker dollar increases the appeal of gold for international buyers. The 10-year yield holds steady near 4.23%, while the 30-year yield remains close to 4.93%. Meanwhile, the 2-year yield trades lower near 3.62%, strengthening the case for upcoming rate cuts.

In addition, markets remain on edge following a significant legal decision. The U.S. Court of Appeals ruled that former President Trump overstepped his authority under the IEEPA. Although the court has issued a temporary stay, the ruling continues to fuel market uncertainty. Meanwhile, the hearing on Trump’s attempt to remove Fed Governor Lisa Cook has been postponed.

Furthermore, Fed official Mary Daly pointed to the possibility of an upcoming policy shift. She suggested that the recent tariff rulings would have a limited impact on inflation. However, recent figures revealed a 0.3% monthly increase in core PCE for July, with annual inflation reaching 2.9%. Despite persistent inflation, markets remain confident about a September rate cut.

Gold approaches key breakout zone after extended consolidation

The gold chart below shows a prolonged consolidation phase on the daily timeframe. Following a sharp rally earlier this year, the price has entered a sideways consolidation. The consolidation range extends from approximately $3,200 to near $3,500, forming a classic price compression zone that often precedes a breakout.

Notably, three clear rejection points have occurred near $3,490. Each attempt to break through the top of the range has failed so far. However, this resistance zone is now under pressure once again. The chart identifies this region as a “Decision Zone,” and a breakout above it could signal the start of a new rally.

Strong support is seen around $3,330 and $3,200 as both levels have repeatedly held during pullbacks. The overall structure remains firmly bullish, supported by an intact trendline that originated in August 2024. Gold now stands on the verge of a potential breakout, supported by rising volume and strengthening momentum. If price pushes decisively above $3,500, higher targets may come into play quickly.

Gold outlook: Breakout looms as policy bets and legal risks align

Gold continues to build strength amid growing macro uncertainty and dovish policy expectations. Supportive technicals further fuel bullish momentum. Meanwhile, dollar weakness and escalating legal tensions are driving the market toward a potential breakout. As gold trades just below record levels, any decisive move above resistance could trigger a fresh rally. Focus has now shifted to upcoming economic data and Fed signals to determine gold’s next move.

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