Gold News: Softer Dollar and Declining Yields Keep Prices Near Record High

Gold Prices Hold Below Record High as Traders Eye Fed Policy Meeting

Gold prices edged lower on Monday, trading just beneath the record high of $2,790.17. Bullish sentiment remains intact, with traders targeting the psychological $3,000 level, although downside risks persist. The nearest support is seen at $2,693.40, while a break below $2,735.96 would shift momentum to the downside.

Spot gold pared earlier losses as the U.S. dollar softened, dipping 0.2%, making gold more attractive to holders of other currencies. While prices initially fell as much as 0.7%, support from risk-off sentiment helped gold stabilize. Geopolitical uncertainty and inflation concerns have reinforced gold’s appeal as a hedge, further bolstered by expectations of stable interest rates.

At 13:09 GMT, XAU/USD is trading $2761.59, down $9.30 or -0.34%.

Fed Meeting and ECB Decision in Focus

Traders are awaiting the Federal Reserve’s upcoming policy meeting on Wednesday, with markets pricing in a more than 99% chance of no rate changes, according to the CME FedWatch tool. A pause in rate hikes would support gold, which benefits in low-interest-rate environments due to its lack of yield.

Across the Atlantic, the European Central Bank is expected to cut rates by 25 basis points this Thursday, a move that could further weigh on the euro while supporting gold as a safe-haven asset.

Safe-Haven Demand Rises Amid Stock Sell-Off

U.S. Treasury yields fell as investors sought safety after a sell-off in tech stocks. The 10-year yield dropped 11 basis points to 4.514%, and the 2-year yield declined to 4.182%. Meanwhile, the dollar index slipped 0.28% to 107.16, remaining close to last week’s one-month low.

The sell-off was triggered by news of a Chinese AI startup, DeepSeek, unveiling a low-cost model, sparking concerns about overvalued U.S. tech stocks. Safe-haven demand also lifted the yen and Swiss franc against the dollar, adding downward pressure to the greenback.

Gold Prices Forecast

The technical and fundamental outlook for gold remains bullish. A breakout above $2,790.17 could pave the way for a test of the $3,000 psychological level. However, a failure to hold current levels could prompt a pullback to $2,735.96 or lower support at $2,693.40.

With the Fed likely to hold rates steady and global economic uncertainty persisting, gold’s safe-haven appeal remains robust, suggesting the metal could trend higher in the short to medium term. Traders will closely monitor this week’s Fed policy announcement and key inflation data for further direction.

More Information in our Economic Calendar.