Gold News: Is an Early Fed Rate Cut the Key to the Next Rally?

Gold Prices Edge Higher as Traders Await US Inflation Data

Gold prices rose on Tuesday as concerns over trade tensions drove safe-haven demand. The US dollar index slipped to a four-month low, making gold more attractive to overseas buyers. Traders are now focused on upcoming US inflation data, which could influence Federal Reserve policy expectations and impact gold’s outlook.

At 11:43 GMT, XAU/USD is trading $2914.56, up $25.06 or +0.87%.

Trade Uncertainty Supports Gold

Market sentiment remains cautious as US trade policies continue to create uncertainty. President Donald Trump’s shifting stance on tariffs—imposing and then delaying duties on Canada and Mexico while increasing tariffs on Chinese goods—has unsettled global markets. China and Canada have retaliated with tariffs of their own, adding to economic uncertainty.

Trump also declined to predict whether the US economy could enter a recession, further fueling investor concerns. Treasury Secretary Scott Bessent described the current economic phase as a “detox period” due to federal spending cuts, while some analysts question the likelihood of a downturn. This mixed outlook has kept gold supported as investors seek safety in volatile market conditions.

Fed Rate Cut Expectations and Inflation Data in Focus

The latest New York Fed survey showed consumer inflation expectations rising slightly, with one-year inflation projected at 3.1%, up from January’s 3%. Market participants are now pricing in a possible rate cut in June, which could provide further support for gold. However, if inflation remains persistently high, the Fed may be forced to maintain higher interest rates, which would limit gold’s upside as it yields no interest.

Investors are now awaiting Wednesday’s Consumer Price Index (CPI) report, which is expected to show a slowdown in inflation. A softer reading could increase expectations of Fed easing, boosting gold demand, while a stronger-than-expected number may pressure prices lower. The Producer Price Index (PPI) data on Thursday will also provide further insights into inflation trends.

Bond Yields and Recession Concerns

US Treasury yields were little changed on Tuesday, reflecting uncertainty over economic conditions. The benchmark 10-year Treasury yield remained steady at 4.219%, while the 2-year Treasury yield hovered around 3.9%, near its lowest level since October. Concerns over slowing growth and recent comments from Trump and his administration have fueled speculation about a potential economic downturn.

Despite recession fears, some analysts argue that key economic indicators—such as strong payroll numbers and steady consumer spending—do not yet justify panic. However, any signs of economic weakness in upcoming data releases could increase demand for gold as a hedge.

Gold Price Forecast

Gold remains supported by safe-haven demand and expectations of Fed rate cuts, but the upcoming inflation data will be a key driver for short-term price action. If CPI data signals easing inflation, gold could see further upside as rate cut bets strengthen. Conversely, a higher-than-expected inflation reading may push bond yields higher, pressuring gold.

Technically, XAU/USD continues to straddle a pair of pivots at $2910.32 and $2895.25. The price action indicates investor indecision and impending volatility.

A breakout over $2930.54 will indicate the return of buyers. This could create the momentum needed to challenge the all-time high at $2956.31.

The lack of buyers or renewed profit-taking could trigger a labored break with potential support pivots at $2864.26 and $2841.43. The major support is the 50-day moving average at $2811.04. This indicator has been controlling the uptrend since January 8.

For now, the outlook leans bullish, with gold likely to remain well-supported unless inflation forces the Fed to maintain restrictive monetary policy. Traders should closely monitor CPI and PPI data, as well as any shifts in rate expectations, for the next significant move in gold prices.

More Information in our Economic Calendar.