Gold Price Prediction: XAU Targets $3,390 as Fed Caution and Weak Dollar Align
Gold is holding firm around $3,343, maintaining momentum after last week’s clean breakout from a descending channel.
Quick overview
- Gold is currently stable around $3,343, buoyed by a bullish sentiment following a breakout from a descending channel.
- Fed Chair Powell's cautious approach and a weakening U.S. dollar are providing support for gold prices.
- Political developments, including Trump's tax-and-spending bill, are raising long-term fiscal concerns that typically benefit gold.
- Technically, gold is consolidating under resistance at $3,358, with a breakout above this level potentially leading to further gains.
Gold is holding firm around $3,343, maintaining momentum after last week’s clean breakout from a descending channel. The bullish bias remains intact as markets wait on key U.S. labor data, but for now, gold is finding support from two major themes: Fed Chair Powell’s cautious stance and continued U.S. dollar weakness.
Powell made it clear the Fed isn’t rushing into rate cuts. He wants more time to see how Trump’s latest tariff wave plays out in the inflation data. That uncertainty alone is helping gold stay in favor, for now, policy easing still looks likely later this year, but the timing remains unclear.
The Dollar Index hit a three-year low, which naturally supports gold prices by making bullion cheaper for non-dollar holders. Meanwhile, May’s job openings rose, but the drop in hiring signals a softer labor market beneath the surface.
With ADP data due later today and nonfarm payrolls (NFP) lined up for Thursday, traders are treading carefully. A strong surprise in jobs could challenge the bullish case for gold, but as Ilya Spivak puts it, that risk looks limited for now.
Politics and Macro Risks Are Still in Play
Trump’s new tax-and-spending bill passed the Senate by a narrow margin on Tuesday. The package includes military spending increases, cuts to social programs, and adds an estimated $3.3 trillion to the national debt. That’s fueling more long-term fiscal concerns, which gold typically thrives on.
On the trade side, Trump is optimistic about a deal with India but remains skeptical about Japan, with the July 9 deadline fast approaching. That geopolitical backdrop is keeping risk sentiment shaky, and until there’s clarity, gold will likely keep its defensive edge.
XAU/USD Technical Outlook: Watching $3,358 and $3,390
Technically, gold looks healthy. The breakout above $3,322 and the 50-period EMA confirms near-term strength. Right now, price is consolidating just under $3,358, which has already held as resistance twice this week.
A break above that level, with volume, could open the door to $3,390, followed by $3,422. But if bulls fail again, expect a pullback into the $3,328–$3,322 zone, likely a retest of support before the next move.
Gold Technical Snapshot:
- MACD still positive but flattening—momentum may pause before resuming
- 50-EMA at $3,322 offers dynamic support
- A confirmed breakout above $3,358 could shift sentiment decisively bullish
Bottom line: Gold remains well-positioned heading into NFP, supported by a cautious Fed, softening labor trends, and a weaker dollar. If we get a clean break above $3,358, the path toward $3,390 becomes a lot clearer.
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