Spot Gold Rallies as Fed Tempers Rate Cut Expectations
- Federal Reserve’s speakers keep cooling hopes for multiple rate cuts this year.
- Investors are now waiting for the United States March Nonfarm Payrolls report.
- XAU/USD could extend its near-term decline, but bulls still hold the grip.
Spot Gold continued its rally on Tuesday, reaching a fresh record high of $2,304.81 per troy ounce fueled by the weakening US Dollar and tempered expectations of rate cuts from the Federal Reserve (Fed). Despite initial hopes of three potential cuts, Fed Chair Jerome Powell and other officials emphasized the Fed’s reluctance to rush into any rate cuts due to the strong economy, above-target inflation, and a tight labor market.
The market is now closely watching for the release of the United States’ March Nonfarm Payrolls report on Friday. Forecasts anticipate a 200K increase in job positions, with the Unemployment Rate expected to remain unchanged at 3.9%. If the report surpasses expectations, the USD may regain ground; however, weaker-than-expected figures may push XAU/USD to new record highs with considerable strength.
XAU/USD Short-term Technical Outlook
The daily chart for XAU/USD indicates a possible bearish correction following seven consecutive days of gains. Technical indicators have started to retreat from extreme overbought levels, although an interim top has not been confirmed. Despite this, XAU/USD remains well above bullish moving averages, suggesting a potential continuation of its upward trend after a minor pullback.
In the 4-hour chart, indicators also support the possibility of an upcoming bearish correction. The pair has retraced slightly, bringing technical indicators out of overbought territory. The Momentum indicator is currently pointing downwards, approaching its 100 line, while the Relative Strength Index (RSI) has flattened at 65, indicating limited selling interest. XAU/USD remains above all of its moving averages, with the 20 Simple Moving Average (SMA) losing some bullish strength but still trending upwards well above the longer-term averages.
Support levels: $2,277.60, $2,261.30, $2,250.70
Resistance levels: $2,295.10, $2,310.00, $2,325.00
