Gold Hits $3,365 as Dollar Slips and U.S. Debt Fears Loom: Will Rate Cuts Spark a Rally?

Gold (XAU/USD) is hanging tight near $3,365 an ounce, as a softer U.S. dollar and mounting worries about the country’s swelling debt keep it supported. The dollar index (.DXY) slipped 0.3% and is flirting with a one-month low, which makes gold—priced in dollars—more appealing to international investors. Traders are now keeping a close eye on upcoming U.S. economic data for clues about what the Federal Reserve might do next with interest rates. “Gold’s rally seems to be taking a breather as the market waits for fresh catalysts,” said Kelvin Wong, a senior market analyst at OANDA Asia Pacific.

One big factor fueling gold’s stability is the growing U.S. budget deficit. Last week, the House passed a version of Trump’s tax-cut plan, which the Congressional Budget Office estimates will add around $3.8 trillion to the federal debt over the next decade. That ballooning debt is making investors nervous about the dollar’s future, which in turn boosts gold’s appeal as a safer bet.

Traders Eye the Fed and Trump’s Tariff Pause

Market watchers are also focused on the Fed’s next moves. Traders are waiting to hear from Fed officials this week and are bracing for the core Personal Consumption Expenditures (PCE) index on Friday for more signals. Right now, the markets are leaning toward a possible Fed rate cut in September. Meanwhile, President Trump’s decision to hold off on slapping 50% tariffs on European Union imports until July 9 has given investors a bit of relief—though uncertainty still lingers.

• The dollar index dropped to a one-month low, giving gold a lift.

• The U.S. tax cut plan could add $3.8 trillion to federal debt.

• Fed officials’ comments and Friday’s PCE data are in focus for clues.

Gold’s Technical Picture: Watch These Levels

On the technical front, gold’s recent chart movements show potential risks. On the 2-hour chart, prices dipped below the rising channel around $3,365 and dropped under the 50-period EMA at $3,319. The next support levels to watch are $3,308 and $3,279, and if those don’t hold, the price might slide to $3,250. The MACD indicator isn’t looking great either—it’s signaling bearish momentum with a crossover and a deepening red histogram.

Candlestick patterns hint at market indecision, with small-bodied candles and long lower wicks appearing near key levels. If gold breaks below $3,319 with conviction, it could trigger a further drop. But if prices rebound above $3,365, backed by strong buying and perhaps a bullish engulfing or three white soldiers pattern, it might signal the return of bullish momentum.