Gold Price Pulls Back Near $3,360 After Three-Day Rally
Gold prices retreated to around $3,360 on Wednesday, pausing after a three-day upward trend. Despite this correction, market participants remain optimistic about the Federal Reserve’s potential interest rate cuts in the upcoming September policy meeting, which supports the outlook for gold as a non-yielding asset.
Market Sentiment Bolstered by Fed Rate Cut Expectations
Traders have significantly increased their bets on a dovish Federal Reserve stance following the latest U.S. Nonfarm Payrolls (NFP) report for June, which indicated a slowdown in labor demand. This softer employment data has fueled expectations that the Fed will ease monetary policy by lowering interest rates, a move that typically benefits gold prices.
Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making the precious metal more attractive to investors. This dynamic has underpinned the recent rally in gold prices, even as the market takes a brief pause to consolidate gains.
Trump to Announce Fed Governor Replacement Amid Rate Policy Speculation
Adding to market intrigue, U.S. President Donald Trump announced plans to reveal the replacement for Fed Governor Adriana Kugler this week. Experts suggest that Trump’s nominee could influence the Fed’s policy direction toward lower interest rates, especially given Trump’s repeated criticisms of Fed Chairman Jerome Powell’s restrictive monetary stance.
In a recent interview, Trump narrowed the list of potential successors for Powell to four candidates, including two individuals named Kevin: White House economic adviser Kevin Hassett and former Fed Governor Kevin Warsh. This shortlist signals a possible shift in the Fed’s leadership that could reinforce expectations of a more accommodative monetary policy.
Technical Analysis: Gold Faces Sideways Movement Amid Market Uncertainty
From a technical perspective, gold is trading within a symmetrical triangle pattern, reflecting uncertainty among traders. The price hovers near the 20-day Exponential Moving Average (EMA) at approximately $3,323, indicating a sideways trend rather than a decisive breakout.
The 14-day Relative Strength Index (RSI) remains range-bound between 40 and 60, suggesting a contraction in volatility and a lack of strong directional momentum. Should gold prices decline further, the next key support level to watch is the psychologically significant round number near $3,300.
Outlook
While gold’s recent pullback signals a temporary pause, the broader market narrative remains supportive of higher prices driven by expectations of Fed rate cuts. The upcoming announcement regarding the Fed governor replacement and the September policy meeting will be critical events to monitor, as they could shape the trajectory of gold prices in the near term.
