Gold prices extended their winning streak for a sixth consecutive session on Tuesday, briefly touching a fresh all-time peak above the $3,500 mark during the Asian session. The surge came as expectations of a September Federal Reserve (Fed) rate cut and intensifying geopolitical tensions bolstered demand for the safe-haven metal. However, a modest rebound in the US Dollar (USD) and technically overbought market conditions prompted a slight retreat, with investors now shifting focus to a series of key US economic releases later this week for fresh direction.
Fed Rate Cut Bets Keep Gold Buoyant
Market sentiment remains firmly tilted toward a Fed rate cut at the upcoming policy meeting, as investors anticipate a more dovish stance to counter slowing US economic momentum. The growing consensus that borrowing costs will be lowered has driven persistent inflows into gold, which typically thrives in low-rate environments due to its non-yielding nature.
US Treasury Secretary Scott Bessent’s defense of President Donald Trump’s decision to fire Fed Governor Lisa Cook over mortgage fraud allegations has further stoked concerns over the Fed’s independence. These political pressures, coupled with Trump’s vocal criticism of Fed Chair Jerome Powell, are keeping the greenback subdued and lending additional support to gold.
Geopolitical Tensions Fuel Safe-Haven Demand
Beyond monetary policy, escalating global geopolitical risks continue to underpin the precious metal’s appeal. The Russia-Ukraine conflict shows no signs of resolution, while tensions in the Middle East remain elevated, keeping investors on edge. These developments have reinforced gold’s role as a preferred safe-haven asset, particularly for institutional traders hedging against heightened uncertainty.
Moreover, recent legal battles over US reciprocal tariffs have added another layer of risk. A federal appeals court’s ruling that Trump’s tariffs were illegal, followed by his pledge to escalate the matter to the Supreme Court, has injected fresh volatility into markets and encouraged investors to seek refuge in gold.
Gold Technical Picture: Overbought but Supported
From a technical perspective, the XAUUSD pair faces difficulty sustaining levels above the $3,500 psychological barrier, suggesting some exhaustion in the short-term rally. Overbought conditions on hourly and daily charts are prompting traders to lock in profits while awaiting clearer signals from the upcoming US data releases.
Still, analysts note that support levels near $3,460–$3,470 could cushion any immediate downside, with the broader bullish trend likely to remain intact as long as Fed policy expectations and geopolitical risks favor safe-haven flows.
Key US Economic Data in Focus
Traders are now turning their attention to a heavy US economic calendar this week, seeking confirmation of the Fed’s dovish trajectory.
Key data points include:
ISM Manufacturing PMI (Tuesday) – Expected to shed light on the health of the manufacturing sector.
JOLTS Job Openings (Wednesday) – A barometer of labor market strength and demand.
ADP Employment Report and ISM Services PMI (Thursday) – Offering insight into private-sector hiring and service sector performance.
Nonfarm Payrolls (NFP) (Friday) – The week’s marquee release, critical in shaping expectations for the Fed’s September decision.
Weaker-than-expected numbers could further solidify rate cut bets, potentially sending gold to fresh record highs, while stronger data might trigger a short-term pullback.
Market Sentiment and Outlook
Investor sentiment remains broadly bullish toward gold, supported by the convergence of macroeconomic, political, and technical factors. The combination of Fed policy uncertainty, geopolitical risks, and legal disputes surrounding US tariffs has created a favorable environment for the metal.
However, short-term volatility is likely as traders navigate key data releases. Any surprises particularly from the jobs market or inflation-related indicators could trigger sharp swings, though the underlying fundamentals suggest that dips in gold prices are likely to attract fresh buying interest.
Conclusion
Gold’s inability to sustain levels above the $3,500 mark reflects a market that is temporarily overbought but fundamentally supported. Expectations of a Fed rate cut, concerns over central bank independence, persistent geopolitical tensions, and tariff-related uncertainties all point to a favorable medium-term outlook for the precious metal.
As the week unfolds, the focus will remain on US economic data, particularly Friday’s Nonfarm Payrolls report, which could determine whether gold consolidates below the $3,500 threshold or embarks on another leg higher toward uncharted territory. For now, gold remains the market’s preferred hedge against uncertainty, with the broader uptrend firmly intact.
