Gold rebounds amid geopolitical risks, Fed rate cut bets, ahead of US data/Fedspeak
- Gold regains positive traction on Thursday following the previous day's retracement slide.
- Geopolitical risks act as a tailwind for the commodity ahead of important US macro data.
- Powell's cautious remarks continue to underpin the USD and might cap the XAU/USD pair.
Gold (XAU/USD) attracts fresh buying during the first half of the European session and has now reversed a major part of the previous day's corrective decline. The growing acceptance that the US Federal Reserve (Fed) will lower borrowing costs again in October and December continues to act as a tailwind for the non-yielding yellow metal. Apart from this, rising geopolitical tensions turn out to be another factor benefiting the commodity's safe-haven status.
Meanwhile, Fed Chair Jerome Powell's cautious remarks earlier this week might have tempered market expectations for a more aggressive policy easing. This, in turn, assists the US Dollar (USD) to stand firm near a two-week high and might keep a lid on any further appreciating move for the Gold price. Traders might also opt to wait on the sidelines ahead of important US macro releases, including the Personal Consumption Expenditure (PCE) Price Index on Friday.
Daily Digest Market Movers: Gold benefits from safe-haven flows and Fed rate cut bets
- Federal Reserve (Fed) Chair Jerome Powell's comments earlier this week pushed the US Dollar to a two-week top and weighed heavily on the non-yielding Gold price on Wednesday. Powell tried to push back against expectations of more interest rate cuts and said that easing too aggressively could leave the inflation job unfinished and necessitate a reversal of course.
- Traders, however, still expect the US central bank to lower borrowing costs again in October and December, following a 25-basis-point rate cut earlier this month. This was the first rate cut since December amid concerns about a softening US labor market. Moreover, the dovish outlook caps any further USD gains and offers some support to the commodity.
- US President Donald Trump escalated his rhetoric against Russia and said on Tuesday that he believes NATO member countries should shoot down Russian aircraft if they enter their airspace. Trump added further that Ukraine, with the support of the European Union and NATO, could win back all of the territory Russia has captured since its invasion.
- This marked a significant shift in Trump's attitude toward Russia. In response, Kremlin spokesperson Dmitry Peskov declared on Wednesday that Russia would continue its offensive on Ukraine to ensure its interests and achieve its goals. Adding to this, Peskov hit back at Trump’s claim and said that the idea that Ukraine can recapture something is mistaken.
- Trump reportedly promised Arab and Muslim leaders that he would not allow Israeli Prime Minister Benjamin Netanyahu to annex the West Bank. Meanwhile, Iran-backed Houthis forces in Yemen claim responsibility for a drone strike, which hit the Israeli city of Eilat on Wednesday. This keeps geopolitical risks in play and underpins the safe-haven commodity.
- Traders now look forward to important US macro releases and speeches from influential FOMC members for some meaningful impetus. The key focus, meanwhile, will be on the US Personal Consumption Expenditure (PCE) Price Index on Friday, which will play a key role in driving the USD demand and determining the near-term trajectory for the XAU/USD pair.
Gold technical setup warrants caution before placing fresh bullish bets
From a technical perspective, this week's failure ahead of the $3,800 mark could be seen as the first sign of a possible bullish exhaustion amid still overbought Relative Strength Index (RSI) on the daily chart. That said, last week's breakout through the $3,700 mark was seen as a key trigger for the XAU/USD bulls and backs the case for the emergence of some dip-buying near the said handle. A convincing break below the latter, however, might prompt some technical selling and drag the Gold price to the $3,650 intermediate support en route to the $3,610-$3,600 region.
On the flip side, momentum beyond the Asian session high, around the $3,752 area, might confront some resistance near the $3,765-3,766 region. The subsequent move up would set the stage for a move towards retesting the all-time peak, around the $3,790 area. Some follow-through buying and acceptance above the $3,800 mark would set the stage for an extension of the recent well-established uptrend witnessed over the past month or so.
Economic Indicator
Core Personal Consumption Expenditures - Price Index (YoY)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Fri Sep 26, 2025 12:30
Frequency: Monthly
Consensus: 2.9%
Previous: 2.9%
Source: US Bureau of Economic Analysis
After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
