Gold price bounces off daily low on broadly weaker USD, keeps the red amid upbeat market mood

Gold price (XAU/USD) finds some support ahead of the $3,200 round-figure mark and trims a part of its modest intraday losses, though the upside potential seems limited. The US Dollar (USD) drops to a nearly two-week low amid bets that the Federal Reserve (Fed) will lower borrowing costs further in 2025, which turns out to be a key factor that offers some support to the non-yielding yellow metal.

Meanwhile, the optimism led by the US-China trade truce for 90 days and hopes for Russia-Ukraine ceasefire remain supportive of a positive risk tone. This, in turn, might hold back bulls from placing aggressive bets and continue to act as a headwind for the Gold price. Traders now look forward to speeches by influential FOMC members, which could provide some impetus to the USD and the XAU/USD pair.

Daily Digest Market Movers: Gold price draws some support from a weaker USD; upside potential seems limited

• Moody's downgraded America's top sovereign credit rating by one notch, to "Aa1" on Friday, citing concerns about the nation's growing debt pile. This, however, had a modest impact on the global risk sentiment amid rising trade optimism, which, in turn, failed to assist the safe-haven Gold price to capitalize on the previous day's modest gains.
• Traders increased their bets on further interest rate cuts by the Federal Reserve in 2025 following the release of weak US inflation figures and Retail Sales data last week. In fact, the current market pricing indicates higher odds of at least two Fed reductions in 2025. This keeps the US Dollar depressed near a one-week low touched on Monday.
• On a more hawkish note, Atlanta Fed President Raphael Bostic said that inflation is not moving to target as fast as anticipated, and inflation expectations are moving in a troubling way. Bostic added that the number of rate cuts this year depends on how things turn out, and details of the tariffs will matter. Bostic leans toward only one rate cut this year.
• New York Fed President John Williams said that the recent economic data has been very good and that the labor market is pretty much in balance. Williams, however, warned that some forward-looking indicators are signaling concern. The key word for the economy is uncertainty, and the monetary policy is in a good place, Williams added further.
• Fed Vice Chairman Philip Jefferson noted that the US could face a one-time increase in the price level from tariffs, but needs to be sure that it does not become a sustained increase in inflation. It is too early to tell how the labor market will be affected by trade policies, and the Fed will keep policy in place to be sure that inflation expectations remain anchored.
• Minneapolis Fed President Neel Kashkari said that the ongoing uncertainty at the hands of the Trump administration's trade policies has put a significant dent in investor sentiment. Kashkari added that there will be lots of jobs in the future of the US economy and backed the Fed's wait-and-see approach until the tariff landscape settles out.
• On the geopolitical front, the Israeli military issued evacuation orders to people in Khan Yunis – the southern city of Gaza – as it launched a new operation to increase pressure on Hamas to accept a temporary ceasefire. Adding to this, Israel's Prime Minister Benjamin Netanyahu claimed that the defence forces will take control of all of the Gaza Strip.
• Meanwhile, US President Donald Trump announced on his Truth Social platform that Russia and Ukraine have agreed to start negotiations towards a ceasefire immediately after separate phone conversations with the leaders of both countries. Trump further said that the conditions of the bilateral talks will be negotiated between the two parties directly.
• There isn't any relevant market-moving economic data due for release from the US on Tuesday, leaving the USD at the mercy of speeches by influential FOMC members. Apart from this, trade-related developments will play a key role in driving the broader risk sentiment and producing short-term trading opportunities around the XAU/USD pair.

Gold price might continue to face stiff resistance near the 200-period SMA on H4, around $3,250-3,255 area

From a technical perspective, the overnight failure near the 200-period Simple Moving Average (SMA) support-turned-resistance on the 4-hour chart and the subsequent slide favors the XAU/USD bears. Moreover, negative oscillators on hourly/daily charts suggest that the path of least resistance for the Gold price is to the downside.

Some follow-through selling below the $3,200 mark and the $3,178-3,177 support zone will reaffirm the outlook, which should pave the way for a slide towards last week's swing low, around the $3,120 area, or the lower level since April 10. This is closely followed by the $3,100 mark, which, if broken decisively, might expose the next relevant support near the $3,060 region.

On the flip side, the $3,250-3,252 area might continue to act as an immediate strong hurdle. A sustained strength beyond the said barrier could suggest that the Gold price has bottomed out and pave the way for additional gains beyond the $3,274-3,275 intermediate resistance, towards the $3,300 round figure. The latter should act as a pivotal point, which, if cleared, would shift the near-term bias in favor of bullish traders.